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It Is Possible to Measure

question 62

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It is possible to measure:


Definitions:

Compounded Monthly

The process of adding interest to the principal sum of a loan or deposit, where the amount of the interest is calculated monthly and then added to the sum, causing interest on interest.

Compounded Semi-Annually

The process of applying interest to an initial amount and to the accumulated interest over two periods within a year.

EAR

Effective Annual Rate, which measures the real return on an investment or the real interest rate on a loan, accounting for the effect of compounding.

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