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A bank offers you two credit cards. The quoted annual percentage rate (APR) your bank charges are both 10%. Credit card 1 charges the interest
A bank offers you two credit cards. The quoted annual percentage rate (APR) your bank charges are both 10%. Credit card 1 charges the interest on a monthly basis (i.e. compound 12 times per year). Credit card 2 charges the interest on a continuous basis (i.e. compound infinite times per year). What is your actual effective annual interest rate (EAR) of credit card 1 if the interest is compounded on a monthly basis? What is your actual effective annual interest rate (EAR) of credit card 2 if the interest is compounded continuously
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