A bank loan has a quoted annual rate of 6%. However, the borrower must maintain a balance
Question:
a. What is the effective rate of interest if the loan is for one year and is paid off in one payment at the end of the year?
b. What is the effective rate of interest if the loan is for one month?
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a Consider a loan of 100 The interest over a one year period will be 6 ...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
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