What is an APR? What is an EAR? Are they the same thing? In general, what...

What is an APR? What is an EAR? Are they the same thing? In general, what is the relationship between a stated interest rate and an effective interest rate? Which is more relevant for financial decisions?

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ekkarill92 answered 2 years ago

Missing the APR: ?% Semiannually 15.50% EAR ?% Monthly 11.50% EAR ?% Weekly 9.50% EAR ?%...

Missing the APR: ?% Semiannually 15.50% EAR ?% Monthly 11.50% EAR ?% Weekly 9.50% EAR ?% Daily 7.50% EAR

APR and EAR: What is meant by the ”frequency of compounding”? Illustrate the meaning of the...

APR and EAR: What is meant by the ”frequency of compounding”? Illustrate the meaning of the “frequency of compounding” for a one-year investment of $100 with an APR of 10% and both annual and semiannual compounding. For a monthly rate of 1%, what is the APR and EAR? What is the relationship--positive or negative--between the APR and EAR and the frequency of compounding? Use the EAR formula and make up a specific numerical example to illustrate that (a) the EAR...

a. What is the effective annual interest rate (EAR) of the APR of 10.5% given that...

a. What is the effective annual interest rate (EAR) of the APR of 10.5% given that it is compounded quarterly? Monthly? Annually? Daily? b. If you purchase a new home for $250,000 today, what is your monthly payment if you have to pay 4.25% annual interest compounded monthly? Assume a 30‐year fixed mortgage (360 months) and 25% down on the home (this is of the purchase price above).

Suppose you are given an APR of 5.3% that compounds semiannually, what is the EAR?

1. Suppose you are given an APR of 5.3% that compounds semiannually, what is the EAR?A. 5.3%B. 5.37%C. 5.41%D. 5.27%2. An Effective Annual Rate (EAR) _____________.A. is an interest rate expressed as if it were compounded four times a year.B. is used to compare investments with different compoundingC. is the same as an Annual Percentage Rate (APR)D. All the above

If the APR is 4% and the compounding period is monthly, what is the EAR? 2.Would...

If the APR is 4% and the compounding period is monthly, what is the EAR? 2.Would you prefer $1000 today or $2000 in 5 years? a.If the prevailing interest rate is 9% b.If the prevailing interest rate is 18% 3What is the present value of a perpetuity that pays an annual cash flow of $150 with prevailing interest rates of 5%? 4What is the present value of a perpetuity that pays its first cash flow of $500 one year from...

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What is an APR? What is an EAR? Are they the same thing? In general, what...

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Missing the APR: ?% Semiannually 15.50% EAR ?% Monthly 11.50% EAR ?% Weekly 9.50% EAR ?%...

APR and EAR: What is meant by the ”frequency of compounding”? Illustrate the meaning of the...

a. What is the effective annual interest rate (EAR) of the APR of 10.5% given that...

Suppose you are given an APR of 5.3% that compounds semiannually, what is the EAR?

If the APR is 4% and the compounding period is monthly, what is the EAR? 2.Would...

1. What is the EAR if the APR is 15 percent compounded daily?Enter answer with...

If EAR is 12% and compounding semiannually, what is the APR? options: 12.05% 11.66% 11.4% 11.48%

Consider a $100 investment paying an EAR of 3.72%, what is the equivalent APR compunded monthly...

What is the difference between the annual percentage rate (APR) and the effective annual rate (EAR)?...

Should we care more about APR or EAR? Why?