A Bank Offers an Account with an APR of 6

question 46

Multiple Choice

A bank offers an account with an APR of 6% and an EAR of 6.09%.How does the bank compound interest for this account?

• A)weekly compounding
• B)monthly compounding
• C)semiannual compounding
• D)annual compounding

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Definitions:

Financial Statement

A formal document outlining the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Cash Inflows

The movement of money into a business or account, often from sales, investments, financing, or other sources.

Cash Outflows

Financial transactions that involve the spending of money, leading to a decrease in the cash balance of a business.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by dividing current assets by current liabilities.