If the Effective Rate of Interest If 15

question 40

Multiple Choice

If the effective rate of interest if 15.55% based on monthly compounding, determine the nominal rate of interest.

• A)17.54%
• B)16.54%
• C)15.54%
• D)14.54%

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Definitions:

Discount Rate

The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Equal Payments

Regular payments that are the same in amount, typically part of a loan or mortgage repayment plan.

Invoice

A document issued by a seller to a buyer, indicating products, quantities, and agreed prices for products or services the seller has provided.

Operating Profit

The revenue made from the primary functions of a business, without accounting for interest and tax deductions.