What Is the Annually Compounded Rate of Interest on an Account

question 43

Multiple Choice

What is the annually compounded rate of interest on an account with an APR of 10% and monthly compounding?

• A) 10.00%
• B) 10.47%
• C) 10.52%
• D) 11.05%

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Definitions:

Premium

The amount paid for an insurance policy or the difference above the nominal or face value of a security.

Expected Value

The predicted value of a variable, calculated as a sum of all possible values each multiplied by the probability of its occurrence.

Insurance Policy

A contractual agreement between an individual or entity and an insurance company, outlining the terms for the insurer to compensate the insured for specific losses in exchange for premiums paid.

Premium

An amount paid in addition to a standard price, often for insurance, or a higher or more privileged level of service or product.