Master Card and Other Credit Card Issuers Must by Law

question 115

Multiple Choice

Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements.If the APR is stated to be 18.00%,with interest paid monthly,what is the card's EFF%?

• A)18.58%
• B)19.56%
• C)20.54%
• D)21.57%
• E)22.65%

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Definitions:

RRSP

A Registered Retirement Savings Plan that allows individuals in Canada to save for retirement on a tax-deferred basis.

Annuity Payment

A fixed amount of money paid to someone each period, typically for the rest of their life or for a fixed number of years, as part of an annuity contract.

Ordinary Annuity

A series of equal payments made at regular intervals, with the interest compounding period being the same as the payment period.

Compounded Annually

Describes interest on an investment that is calculated annually and added to the principal sum, thus earning further interest in subsequent years.