What Is the Effective Interest Rate (Rounded) on a 3-Month

question 81

Multiple Choice

What is the effective interest rate (rounded) on a 3-month, noninterest-bearing note with a stated rate of 12% and a maturity value of $200,000?

• A) 12.4%.
• B) 13.6%.
• C) 11.5%.
• D) 3.1%.

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Definitions:

Consumer Price Index

An index measuring the change in the price level of a basket of consumer goods and services purchased by households.

Basket

A collection of goods, services, or financial instruments grouped together for the purpose of analysis, comparison, or investment.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

West Region

A term that could refer to the western part of a country, area, or specified region, often defined by geographic, administrative, or socioeconomic criteria.