Other Things Being Equal,the More Frequent the Compounding Period,the

question 105

Multiple Choice

Other things being equal,the more frequent the compounding period,the:

• A) higher the annual percentage rate.
• B) lower the annual percentage rate.
• C) higher the effective annual interest rate.
• D) lower the effective annual interest rate.

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Definitions:

Cash Operating Expenses

Expenses incurred during the operational activities of a business that affect cash flow, such as paying salaries and purchasing materials.

Simple Rate Of Return

A financial ratio used to calculate the profit an investment will generate, expressed as a percentage of the initial cost.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value after accounting for the effects of taxes.

Working Capital

The difference between a company's current assets and current liabilities, indicating its liquidity and operational efficiency.