If Interest Is Compounded Daily, Then

question 63

Multiple Choice

If interest is compounded daily, then

• A)the annual percentage rate (APR)is greater than the effective annual rate (AER).
• B)the investor will earn less interest than if interest were compounded monthly instead.
• C)the annual percentage rate (APR)is lower than the effective annual rate (AER).
• D)the annual percentage rate (APR)is equal to the effective annual rate (AER).

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Definitions:

Accrual

An accrual occurs when revenue has been earned or an expense has been incurred but has not been recorded.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.

Wages Expense

The total amount of wages paid by a business to its employees for a specified period of time.

Accounts Receivable

Money owed to a business by its customers for goods or services provided on credit.