Bank One Currently Charges a 10 Percent Simple Rate on a Car

question 131

Multiple Choice

Bank One currently charges a 10 percent simple rate on a car loan where the interest is compounded semiannually.Bank Two offers a car loan where the interest is compounded quarterly.What simple rate would Bank Two have to charge in order to earn the same effective annual rate that is earned by Bank One?

• A) 9.25%
• B) 9.88%
• C) 10.00%
• D) 10.25%
• E) 10.42%

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Definitions:

Thyroid Gland

Large gland in the neck that produces several important hormones, including thyroxine, triiodothyronine, and calcitonin.

Iodized Salt

Salt that has been fortified with iodine, a nutrient essential for thyroid function.

Thyroid

A gland in the neck that secretes hormones regulating growth and metabolism by controlling the rate of metabolism and the rate at which the body uses energy.

Iodine

A chemical element necessary for thyroid gland function, also used as a disinfectant.