What Is the EAR for a $100 Loan When the Interest

question 49

Multiple Choice

What is the EAR for a $100 loan when the interest is compounded monthly and the stated annual interest rate is 7 percent?

• A)7.0 percent
• B)8.0 percent
• C)7.23 percent
• D)12.0 percent
• E)16.0 percent

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Definitions:

Issue Price

Issue price is the cost at which new securities are offered to the public by an issuer, determining the initial capital raised from the financial market.

Par Value

The nominal or face value of a security as indicated by the issuer.

Liabilities

Financial obligations or debts owed by a business to another entity, payable in the future.

Debt-To-Equity Ratio

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.