A Loan Is Offered with Monthly Payments and a 10

question 149

Multiple Choice

A loan is offered with monthly payments and a 10 percent APR. What is the loan's effective annual rate (EAR) ?

• A) 10.00 percent
• B) 10.47 percent
• C) 11.20 percent
• D) 12.67 percent

---

Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; often referred to as the bottom line.

Average Total Assets

A financial metric calculated by averaging a company's total assets over a certain period, used to measure a company's asset utilization efficiency.

Held-to-maturity Securities

Debt securities that a company intends and is able to hold until they mature.

Equity Securities

Equity Securities are financial assets representing ownership interest in a company, such as stocks, which provide voting rights and potential dividends.