A 12% APR with Bi-Monthly Compounding Is Is Equivalent to an EAR

question 10

Multiple Choice

A 12% APR with bi-monthly compounding is is equivalent to an EAR of:

• A)11.98%.
• B)12.50%
• C)12.00%.
• D)12.62%.

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Definitions:

FICA Tax

A United States federal payroll tax that funds Social Security and Medicare, contributions are made by both employees and employers.

Social Security

A government system that offers financial assistance to people in the form of retirement benefits, disability income, and other payments.

Medicare

A federal health insurance program in the United States for people aged 65 and over, as well as for some younger people with disabilities.

Payroll Deductions

Amounts subtracted from an employee's gross salary for taxes, insurance premiums, benefits, and other payroll-related charges.