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If a bank wants to earn an effective annual return (EAR) of 15% on its consumer loan, what annual interest rate (APR) should the bank
- If a bank wants to earn an effective annual return (EAR) of 15% on its consumer loan, what annual interest rate (APR) should the bank quote to potential borrowers assuming the interest is calculated daily?
- The correct answer is 13.97%
- Continued with previous question. Suppose you have credit card loan balance from the previous bank and then you receive a credit card application invitation from another bank, which offers an introductory APR of 4.5%, compounded monthly for the first 6 months, and then the APR increases to 20%. Should you transfer your balance to the second bank?
- The correct answer is 12.93%
- How do I calculate both of these answers with a financial calculator?
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Consumer Credit And The American Economy
Authors: Thomas A. Durkin, Gregory Elliehausen, Michael E. Staten, Todd J. Zywicki
1st Edition
0195169921, 978-0195169928
