Question: The difference between EAR and APR decreases as the number of compounding periods in a year increases. True False You have deposited your money for

The difference between EAR and APR decreases as the number of compounding periods in a year increases. True False

You have deposited your money for one year with an APR quote of 3 %. You will receive the interest payments quarterly (four times in a year). Then, what you effectively earn from this investment is higher than 3%.

True False

Effective Annual Rate (EAR) is the real return on an investment when the effects of compounding over time are taken into account. True False

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