As a College Student, You Probably Receive Many Credit Card

question 76

Multiple Choice

As a college student, you probably receive many credit card offers in the mail. Consider these two offers. The first card charges a 17 percent APR. An examination of the footnotes reveals that this card compounds daily (365 day year) . The second credit card charges 18 percent APR and compounds semiannually. What is the effective annual rate of the cheaper card?

• A) 18.00 percent
• B) 17.00 percent
• C) 18.81 percent
• D) 18.53 percent

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Definitions:

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Contingent Liabilities

Contingent liabilities are potential liabilities that may occur depending on the outcome of a future event.

Account

A record in bookkeeping that tracks financial transactions of a specific type, such as assets, liabilities, expenses, or revenue.

FUTA

The Federal Unemployment Tax Act, a United States federal law that imposes a payroll tax on businesses to fund state workforce agencies.