A)40. B)3C)6

question 61

Multiple Choice

• A)40.
• B)3.
• C)6.
• D)9.

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Definitions:

Effective (Annualized) Yield

The effective, or annualized yield, calculates the return on an investment by taking into account the effect of compounding interest over a one-year period.

Quarterly Compounding

The process of calculating interest and adding it to the principal sum of a loan or deposit on a quarterly basis.

Effective Rate

The interest rate on a loan or investment, adjusted for the effect of compounding over a given period.

Compounded Quarterly

Generating interest on both the initial principal and previously earned interest every three months.