As a Result of Compounding, the Effective Annual Rate on a Bank

question 57

True/False

As a result of compounding, the effective annual rate on a bank deposit (or a loan) is always equal to or greater than the nominal rate on the deposit (or loan).

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Definitions:

Chain Smoker

An individual who smokes cigarettes successively, frequently lighting the next cigarette with the previous one.

Action Stage

A phase in the Transtheoretical Model of behavior change where individuals apply specific strategies to engage in new behaviors.

Marijuana Addiction

A condition where an individual becomes dependent on marijuana, facing difficulty in controlling its use despite negative consequences.

Preparation Stage

A stage in the model of behavioral change where the individual intends to take action in the immediate future to address a problematic behavior.