Partners Bank Offers to Lend You $50,000 at a Nominal

question 98

Multiple Choice

Partners Bank offers to lend you $50,000 at a nominal rate of 5.0%, simple interest, with interest paid quarterly.An offer to lend you the $50,000 also comes from Community Bank, but it will charge 6.0%, simple interest, with interest paid at the end of the year.What's the difference in the effective annual rates charged by the two banks?

• A) 1.56%
• B) 1.30%
• C) 1.09%
• D) 0.91%
• E) 0.72%

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Definitions:

Industrial/Organizational Psychologists

Psychologists specializing in the application of psychological principles and techniques to workplace environments, issues, and behaviors.

Behavior Modification

A treatment approach, based on the principles of operant conditioning, that replaces undesirable behaviors with more desirable ones through positive or negative reinforcement.

Yerkes-Dodson Law

A theory suggesting that there is an optimal level of arousal for performance, and that too much or too little arousal can adversely affect task performance.

Task Difficulty

The level of challenge presented by a task, which can influence a person's performance and effort required to complete it.