An 8% APR with Monthly Compounding Is Closest to Which

question 85

Multiple Choice

An 8% APR with monthly compounding is closest to which of the following?

• A) an EAR of 6.7%
• B) an EAR of 8.3%
• C) an EAR of 8.5%
• D) an EAR of 7.72%

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Definitions:

Cash Balance

The amount of cash held by a company in its financial accounts at a specific point in time, reflecting its immediate liquidity position.

Creditors

Entities or individuals to whom a company owes money, due to the provision of goods, services, or loans.

Technical Services

Specialized services that require technical expertise or skills, often provided in fields such as IT, engineering, or maintenance.

Fair Value

The selling price of an asset or the expense involved in handing over a liability during a regulated deal with participants in the market on the specified valuation date.