Your Bank Pays a Quoted Annual (Nominal)rate of 12

question 246

Multiple Choice

Your bank pays a quoted annual (nominal) rate of 12%. However, it compounds interest every week (52 times a year) . What is the effective annual rate (EAR) ?

• A)Less than 12%
• B)Exactly 12%
• C)12.01% - 12.35%
• D)12.36% - 12.70%
• E)More than 12.70%

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price.

Price Range

The spectrum of prices at which a particular product is sold in the market, from the lowest to the highest.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Substitutes

Products or services that can replace each other in use or consumption, thereby affecting consumer choices and market dynamics.