The R&M Bank Currently Offers an Investment Account with an Interest

question 32

Multiple Choice

The R&M Bank currently offers an investment account with an interest rate of 6% compounded monthly.R&M wants to offer customers another account with interest compounded quarterly.If R&M wants the effective rates to be equal, what interest rate should R&M quote for the second account?

• A)2.00%
• B)6.00%
• C)6.03%
• D)6.17%

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Definitions:

Gross Method

An accounting method where purchases are recorded at their full (gross) cost without deducting any cash discounts.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including the repayment period, interest rate, and the amount of the loan.

Sales Discounts

Reductions in the sale price offered by a seller to a buyer, typically to encourage prompt payment or in response to bulk orders.

Sales Returns

Goods returned by customers post-purchase, leading to a reversal of sales revenue.