The Smart Bank Wants to Appear Competitive Based on Quoted

question 71

Multiple Choice

The Smart Bank wants to appear competitive based on quoted loan rates and thus must offer a 7.9 annual percentage rate.What is the maximum rate the bank can actually earn based on the quoted rate?

• A)7.90%
• B)8.18%
• C)8.20%
• D)8.22%
• E)8.39%

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Definitions:

Financing Activities

Transactions and business activities that result in changes in the size and composition of the equity capital and borrowings of an entity.

Price-To-Book Ratio

A financial ratio used to compare a company's current market price to its book value, indicating the market's valuation of the company relative to its equity value.

Earnings Yield

The inverse of the price-to-earnings ratio, representing the earnings per share divided by the price per share.

P/E Ratio

The price-to-earnings ratio compares a company's share price to its earnings per share, indicating how much investors are willing to pay per dollar of earnings.