Your Bank Account Pays a 6% Nominal Rate of Interest

question 88

Multiple Choice

Your bank account pays a 6% nominal rate of interest.The interest is compounded quarterly.Which of the following statements is correct?

• A)The periodic rate of interest is 1.5% and the effective rate of interest is 3%.
• B)The periodic rate of interest is 6% and the effective rate of interest is greater than 6%.
• C)The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%.
• D)The periodic rate of interest is 3% and the effective rate of interest is 6%.

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Definitions:

Business Expenses

Costs incurred in the ordinary course of business, including operational costs, utilities, salaries, and rent.

Tactical Plans

Short-range plans designed to implement the activities and objectives specified in the strategic plan.