Suppose Your Credit Card Issuer States That It Charges a 15.00

question 113

Multiple Choice

Suppose your credit card issuer states that it charges a 15.00% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding.What is the effective annual rate?

• A) 15.27%
• B) 16.08%
• C) 16.88%
• D) 17.72%
• E) 18.61%

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Definitions:

Equilibrium Market Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, leading to a state of market balance.

Price Floor

A government- or authority-imposed minimum price below which a certain product cannot be sold, typically above the equilibrium price to ensure producers receive a minimum income.

Government

The organizational structure through which a society makes and enforces its public policies and exercises authority over its citizens.

Pencils

Writing or drawing instruments with a thin core of graphite or a similar substance encased in a protective casing.