What Is the Effective Annual Rate If a Bank Charges

question 42

Multiple Choice

What is the effective annual rate if a bank charges you 7.35 percent,compounded daily?

• A)7.24%
• B)7.59%
• C)7.63%
• D)7.51%
• E)7.29%

---

Definitions:

Recorded Incorrectly

Refers to transactions or entries that have been documented in an erroneous manner within the financial records.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Short-term Investments

Investments typically held for one year or less, intended for quick conversion to cash without a significant risk of loss.