Question
Your bank account pays 8.0% stated annual interest rate (or APR). The interest is compounded quarterly. Which of the following statements is CORRECT? & WHY?
Your bank account pays 8.0% stated annual interest rate (or APR). The interest is compounded quarterly. Which of the following statements is CORRECT? & WHY?
a. The quarterly interest rate is 2.0% and the effective annual interest rate is 4.0%.
b. The quarterly interest rate is 8.0% and the effective annual interest rate is greater than 8.0%.
c. The quarterly interest rate is 2.0% and the effective annual interest rate is greater than 8.0%.
d. The quarterly interest rate is 4.0% and the effective annual interest rate is 8.0%.
e. The quarterly interest rate is 8.0% and the effective annual interest rate is 8.0%.
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Fundamentals Of Strategy
Authors: Gerry Johnson, Kevan Scholes, Richard Whittington
2nd Edition
0273713108, 9780273713104
