Your Bank Account Pays a 5% Nominal Rate of Interest

question 18

Multiple Choice

Your bank account pays a 5% nominal rate of interest.The interest is compounded quarterly.Which of the following statements is CORRECT?

• A) The periodic rate of interest is 5% and the effective rate of interest is also 5%.
• B) The periodic rate of interest is 1.25% and the effective rate of interest is 2.5%.
• C) The periodic rate of interest is 5% and the effective rate of interest is greater than 5%.
• D) The periodic rate of interest is 1.25% and the effective rate of interest is greater than 5%.
• E) The periodic rate of interest is 2.5% and the effective rate of interest is 5%.

---

Definitions:

Vocalization

Vocalization refers to the production of sounds or utterances as a means of communication, common in both humans and animals.

Complex Communication

The exchange of information that involves multiple methods, such as verbal, non-verbal, written, and digital, to convey messages effectively.

Syntax

The arrangement of words and phrases to create well-formed sentences in a language.

Vocalization

The act of producing sound with the vocal cords to communicate or express oneself.