An APR Will Be Equal to an Effective Annual Rate

question 57

Multiple Choice

An APR will be equal to an effective annual rate if:

• A) compounding occurs monthly.
• B) compounding occurs continuously.
• C) compounding occurs annually.
• D) an error has occurred; these terms cannot be equal.

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Definitions:

Securitization

The process of transforming illiquid assets into a tradable form by converting them into securities.

Private Equity

Capital investments made into companies that are not publicly traded, often to finance growth, acquisitions, or restructuring.

Dodd-Frank Reform Act

A comprehensive piece of financial regulation passed in 2010 in the United States, aimed at preventing the recurrence of financial crises through increased regulation.

Capital Requirements

The minimum amount of capital a bank or other financial institution must hold as required by its financial regulator.