Which One of the Following Statements Is TRUE About the Effective

question 66

Multiple Choice

Which one of the following statements is TRUE about the effective annual rate (EAR) ?

• A) The effective annual interest rate (EAR) is defined as the annual growth rate that takes compounding into account.
• B) The EAR conversion formula accounts for the number of compounding periods and, thus, effectively adjusts the annualised interest rate for the time value of money.
• C) The EAR is the true cost of borrowing and lending.
• D) All of the above are true.

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Definitions:

Performance Perspectives

Performance categories for assessment on the balanced scorecard, traditionally made up of financial, internal processes, learning and growth, and customer perspectives.

Supply Chain

The entire network of entities, directly or indirectly interlinked and interdependent in serving the same consumer or customer, involved in the supply of a product or service.

Multifunctional Team

A team composed of members from different functional areas of an organization working towards a common goal.

BSC Performance Management System

A strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.