If an Investment Provides a 1

question 28

Multiple Choice

If an investment provides a 1.25% return quarterly, its effective annual rate is

• A) 5.23%.
• B) 5.09%.
• C) 4.02%.
• D) 4.04%.

---

Definitions:

Deadweight Loss

The decrease in economic effectiveness when a product or service fails to achieve or cannot attain its balance point.

Cheesecake

A sweet dessert consisting of one or more layers, primarily a thick layer of cream cheese and egg mixture set atop a base made from crushed cookies, crackers, or sponge cake.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market stability where there is no excess supply or demand.

Consumption Tax

A tax on the spending on goods and services purchased by consumers.