The Stated Rate of Interest Is 10

question 27

Multiple Choice

The stated rate of interest is 10%. Which form of compounding will give the highest effective rate of interest?

• A) annual compounding
• B) monthly compounding
• C) daily compounding
• D) continuous compounding
• E) It is impossible to tell without knowing the term of the loan.

---

Definitions:

Demand Requirements

The specific needs or quantities of products or services required by the market or a particular customer.

Qualitative Forecasting

The method of prediction based on non-quantifiable information such as expert opinions, industry trends, and qualitative comparisons.

Scenario Planning

A method used by organizations to visualize and plan for possible future conditions or events and how to respond to them.

Nominal Group Techniques

A structured method for group brainstorming that encourages contributions from everyone in the group and is used to generate and prioritize ideas or solutions.