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The Most Accurate Method Currently Available for Calculating the Annual

question 80

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The most accurate method currently available for calculating the annual percentage rate (APR)on an add-on loan is the Rule of 78.


Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer.

Stock Split

A corporate action that increases the number of shares outstanding by issuing more shares to current shareholders proportionately.

Market Price

The market price currently for acquiring or selling a service or asset.

Dividend Income

Income received from owning shares of a company that pays dividends.

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