When Providing Rewards for a Frequency Program, a Variable Ratio

question 73

True/False

When providing rewards for a frequency program, a variable ratio reward schedule is superior to regularly scheduled rewards.

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Definitions:

Compounded Monthly

A method of calculating interest where accrued interest is added to the principal sum of a loan or deposit each month.

Periodic Rate

The interest rate for a specific period, often rephrased as the interest rate applicable over regular intervals such as monthly or quarterly.

Effective Interest Rate

The real rate of interest earned or paid on an investment or loan, taking into account the effect of compounding.

Finance Charge

A fee representing the cost of credit, or the cost of borrowing, including interest and other charges.