You have been offered a credit card that charges an interest rate of 9% per semiannual...

You have been offered a credit card that charges an interest rate of 9% per semiannual period. By regulation, they must disclose (in the fine print) an APR to their customers. What is the APR they disclose and what is their EAR?

Expert Solution

APR=9% per semi annual period*2 periods

=18%

EAR=[(1+APR/m)^m]-1
where m=compounding periods

=[(1+0.09)^2]-1

=18.81%

jeff jeffy answered 2 years ago

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