Bank One Currently Charges a 10 Percent Simple Rate on a Car

question 131

Multiple Choice

Bank One currently charges a 10 percent simple rate on a car loan where the interest is compounded semiannually.Bank Two offers a car loan where the interest is compounded quarterly.What simple rate would Bank Two have to charge in order to earn the same effective annual rate that is earned by Bank One?

• A) 9.25%
• B) 9.88%
• C) 10.00%
• D) 10.25%
• E) 10.42%

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