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:

Trade Surplus

A situation in which a country's exports exceed its imports during a specific period of time.

Rate Of Exchange

The worth of one currency when converted into another.

Pound

The currency unit of the United Kingdom, also known as the pound sterling, symbolized by £.

Dollar

A unit of currency used in the United States and other countries, symbolized by $.