A Bank Offers an Account with an APR of 5

question 3

Multiple Choice

A bank offers an account with an APR of 5% and an EAR of 5.12%. How does the bank compound interest for this account?

• A)annual compounding
• B)monthly compounding
• C)weekly compounding
• D)semi-annual compounding

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Definitions:

Consistency

The quality of being uniform, stable, and free from contradiction over time.

Consensus

A form of collective agreement where all members of a group support a decision even if it may not be their first choice, ensuring that everyone's opinion is considered.

Self-Serving Bias

is the common human tendency to attribute positive outcomes to one's own character or behaviors but blame outside factors for negative outcomes.

Fundamental Attribution Error

A psychological bias where people tend to attribute others' behavior too much to internal or personal factors and too little to situational factors.