Which Is Not a Component of the Formula APY =

question 28

Multiple Choice

Which is not a component of the formula APY = (1 + r/n) ⁿ - 1?

• A)n - 1 = Compound minus interest rate
• B)r = Stated annual interest rate
• C)n = Number of times you'll compound every year
• D)APY = Annual percentage yield

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Definitions:

Stephen Ross

An influential economist and finance professor known for his work in developing the Arbitrage Pricing Theory and other significant contributions to finance.

Security Market Line

A graphical representation of the expected return of investments as a function of their risk, depicting the relationship between the risk and the expected return of the market.

Fairly Priced

A term indicating that an asset's selling price is considered to be in line with its intrinsic value.

Homogeneous Expectations

An assumption in finance that all investors have the same expectations regarding the future rates of return, volatilities, and correlations of securities.