If a bank compounds savings accounts quarterly, the effective annual rate (EAR) will be greater than the annual percentage rate (APR) True False
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- If a bank compounds savings accounts monthly, the effective annual rate is greater than the nominal rate Group of answer choices True False. If a bank advertises a savings account that paysan 8% nominal interest rate compounded continuously, what is the effective annual percentage rateThe effective annual rate of interest on a bank account is 2.5% and the general rate of inflation is 4%. b) Using the information provided directly above, explain the concept of a ‘real rate of return’.
- A bank features a savings account that has an annual percentage rate of r=3.1r=3.1% with interest compounded quarterly. Breanna deposits $6,500 into the account. The account balance can be modeled by the exponential formula S(t)=P(1+rn)ntS(t)=P(1+rn)nt, where SS is the future value, PP is the present value, rr is the annual percentage rate written as a decimal, nn is the number of times each year that the interest is compounded, and tt is the time in years. (A) What values should be used for PP, r, and nn? P=P= , r=r= , n=n= (B) How much money will Breanna have in the account in 88 years? Answer = $ . Round answer to the nearest penny.Which of the following bank accounts has the highest effective annual return? An account that pays 8% nominal interest with daily (365-day) compounding. An account that pays 8% nominal interest with monthly compounding. An account that pays 8% nominal interest with annual compounding. An account that pays 7% nominal interest with daily (365-day) compounding. An account that pays 7% nominal interest with monthly compounding.a bank charges one and one-half percent per month on the unpaid balance for purchases made its credit card. this is equivalent to what effective annual interest rate?
- The financial manager obtains a quote from a third bank, Bank TMN, for interest on the loan at 10.5%, compounded bi-annually without calculating the effective annual rate (EAR for the loan from bank TMN, would you expect the EAR to be higher or lower than the EAR for the loan from bank DEF?Which of the following bank accounts has the lowest effective annual return? a. An account that pays 7% nominal interest with daily (365-day) compounding. b. An account that pays 7% nominal interest with monthly compounding. c. An account that pays 8% nominal interest with daily (365-day) compounding. d. An account that pays 8% nominal interest with annual compounding. e. An account that pays 8% nominal interest with monthly compounding.A bank features a savings account that has an annual percentage rate of r=3.4% with interest compounded weekly. Alfonso deposits $11,500 into the account. The account balance can be modeled by the exponential formula S(t)=P(1+r/n)^nt, where S is the future value, P is the present value, rr is the annual percentage rate, nn is the number of times each year that the interest is compounded, and tt is the time in years. What values should be used for P, r, and n?P= , r= , n= How much money will Alfonso have in the account in 10 years?Answer = $ .Round answer to the nearest penny. What is the effective annual rate for the savings account?effective rate = %.Round answer to 3 decimal places.
- Which of the following bank accounts has the lowest effective annual return? Group of answer choices 1. An account that pays 8% nominal interest with monthly compounding. 2. An account that pays 8% nominal interest with daily (365-day) compounding. 3. An account that pays 7% nominal interest with monthly compounding. 4. An account that pays 8% nominal interest with annual compounding. 5. An account that pays 7% nominal interest with daily (365-day) compounding.A bank quoted 10% annual interest rate. If the bank compounds the interest rate quarterly, what would be the effective annual rate (EAR)?What is the effective rate of interest if a bank specified a nominal rate of 20% compounded annually?
