Question: Which statement below is false about the difference between the effective annual rate (EAR) and the annual percentage rate (APR)? EAR would be equal

Which statement below is false about the difference between the effective annual rate (EAR) and the annual percentage rate (APR)? EAR would be equal to APR when the compounding frequency is annual. The APR is a stated rate and is computed as (r* n), where r is the rate per period and n is the number of periods per year. The effective annual rate will not always be higher than the annual percentage rate as long as the account is compounded more than once a year and the interest rate is greater than zero. The EAR considers compounding and is computed as (1 + r/n)^n - 1, where r is the rate per period and n is the number of periods per year.

Step by Step Solution

★★★★★

3.37 Rating (153 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The detailed answer for the above question is provid... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Which of the following statements is False about the factors that affect pricing decisions? 1-Information about production variances on the product may affect pricing. 2-Information about...

Which statement below is false concerning the reporting for bond issues in the fund statements of a government? a. Proceeds from bonds issued to finance capital projects are reported as other...

Which of the following is FALSE about the contribution format income statement? Group of answer choices A. It organizes expense items based on a company's functions, such as production, marketing and...

Question 14 2 pts Which statement below is false about the difference between the effective annual rate (EAR) and the annual percentage rate (APR)? O The EAR considers compounding and is computed as...

T Flip-Flop Component Name(s) [print] The 74-74 is a dual D flip-flop (DFF), with indepen- dent preset, reset, and clock inputs for each flip-flop. Note that the preset (PRE on the pinout, 5 on the...

Attached are two exercises on Bond Pricing and Time value of money how can you guide me on the exercise 2016 Spring2 Financial Concepts Week3 Exercise6 Time Value of Money Student Name: Instructions...

please help me. I can pay only 70 dollars in this assignment Topic 1 & 2 Introduction to financial management and the Australian Taxation system Financial Markets 2 Learning Objectives Describe what...

Your inheritance will pay you $100,000 a year for five years beginning now. You can invest it in a CD that will pay 7.75 percent annually. What is the present value of your inheritance? (Round to the...

please help me in 70 dollars to do this assignment iin APA style referencing Topic 1 & 2 Introduction to financial management and the Australian Taxation system Financial Markets 2 Learning...

Question 5 As the world learns to live with the novel coronavirus (COVID-19), policymakers need to understand the macroeconomic consequences of the covid-related restrictions. Australia adopted a...

1. [-/10 Points] DETAILS Find the average value gave t of the function g on the given interval. g(t) = [3, 7] 7 + gave =

The in-control model for a certain quality characteristic (x bar.jpg ) is given by CL = 10, UCL = 10.15 and LCL = 9.85 with 3-sigma control limits and n = 16. Calculate the Upper Warning Limit (UWL),...

An Australian company has an existing 90-day 8.0% promissory note facility with a face value of AUD 1,400,000, which rolls over in 90 days. When it does roll-over (90 days later), the interest rate...

What happens to the price elasticity of the demand for coal when the quantity of coal demanded is measured in kilograms instead of tons? The price elasticity will be neither more nor less elastic....

1. Review Critical Legal Thinking Case 17 on page 310 of the textbook entitled United States v. Michaels Jewelers, Inc. Using IRAC, identity the issue(s) in this case. Explain the applicable rule....

The following information is related to Whispering Company for 2020. Retained earnings balance, January 1, 2020$1,078,000 Sales Revenue27,500,000 Cost of goods sold17,600,000 Interest revenue77,000...

1. What is the semi-annually compounded interest rate if $200 accumulates to $318.77 in eight years? Answer in percentage with two decimal places. 2. What is the quarterly compounded interest rate if...

Compare some of the competitive strengths and weaknesses of venture capital, as practiced in Europe, Japan, and Canada, with those of the United States.

Why must manager intuition be part of the investment- decision process regardless of a project NPV or IRR? Why is it helpful to think about real options when making an investment decision?

How does the dynamic interpretation of antitrust laws affect managers acquisition strategies? What impact does the involvement of individual states have on the acquisition decision?

What is really the cause of the conflict?

Label the following statements by selecting either (a) internal attributions or (b) external attributions. Check your answers against those at the end of the exercises. a. He did this to me because...

Which conflict theory discussed in this chapter best explains this conflict?