An Interest Rate That Has Been Annualized Using Compound Interest

question 13

Multiple Choice

An interest rate that has been annualized using compound interest is termed the:

• A) discount factor.
• B) annual percentage rate.
• C) discounted interest rate.
• D) effective annual interest rate.

---

Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Consumes

To use up resources or goods, typically in the context of eating, drinking or utilizing products to satisfy needs or wants.

Utility Function

A mathematical representation that describes how consumers rank different bundles of goods according to their level of satisfaction or utility.

Consumption

The process by which goods and services are utilized by consumers, influencing economic activity and growth.