If interest is compounded more than once a$$ year, will the effective interest rate be higher than the annual stated interest$$ rate? Explain.

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Part $1$

$$

No

Yes

$.$ When interest is compounded more than once per$$ year, we determine the interest rate used in computations by

$$

dividing the annual rate by the number of periods

dividing the annual rate by $12$ months

multiplying the annual rate by the number of periods

multiplying the annual rate by $12$ months

$.$ If interest is compounded more than once a$$ year, then the effective interest$$ rate, which is

$$

the amount of interest actually earned

the amount of simple interest in one compounding period

the effect of the interest rate on loan balances

the effect of the interest rate on net income

$,$ will be

$$

higher than

lower than

the stated interest rate.