A 10% APR with Quarterly Compounding Is Equivalent to an EAR

question 33

Multiple Choice

A 10% APR with quarterly compounding is equivalent to an EAR of ________.

• A) 10.00%
• B) 10.47%
• C) 10.38%
• D) 9.81%

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Definitions:

Profits

The financial gain realized when the revenue earned from economic activities exceeds the expenses, costs, and taxes associated with sustaining the activity.

Firms

Business entities engaged in commercial, industrial, or professional activities, either for profit or as a nonprofit.

Perfectly Competitive

a market structure characterized by a large number of small firms, a homogeneous product, perfect information, and no barriers to entry or exit.

Patents

Legal documents granting an inventor exclusive rights to produce, use, and sell their invention for a specific period of time.