Your Bank Account Pays a 6% Nominal Rate of Interest

question 102

Multiple Choice

Your bank account pays a 6% nominal rate of interest.The interest is compounded quarterly.Which of the following statements is CORRECT?

• A) The periodic rate of interest is 1.5% and the effective rate of interest is 3%.
• B) The periodic rate of interest is 6% and the effective rate of interest is greater than 6%.
• C) The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%.
• D) The periodic rate of interest is 3% and the effective rate of interest is 6%.
• E) The periodic rate of interest is 6% and the effective rate of interest is also 6%.

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Definitions:

European Countries

Nations located on the continent of Europe, each with its own unique cultural, political, and economic characteristics.

Standardization

The process of making something conform to a standard in order to ensure consistency and interoperability across different platforms, products, or systems.

Multidomestic Strategy

A strategy that concentrates on the development of foreign markets by selling to foreign nationals.

Multinational Strategy

Standardizing the products and services around the world to gain efficiency.