Which of the Following Statements Is True About the Effective

question 98

Multiple Choice

Which 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 rates that do not take compounding into account.
• B) The EAR is the annualized interest rate using simple interest. It ignores the interest earned on interest associated with compounding periods of less than one year.
• C) The EAR is the simple interest charged per period multiplied by the number of periods per year.
• D) The EAR is the interest rate actually paid (or earned) after accounting for compounding.

Analyze the impact of cooperative versus non-cooperative behavior in markets with externalities.

Understand the concept and application of Pigouvian taxes and subsidies as a means to correct market failures due to externalities.

Recognize the tragedy of the commons and overuse of common resources.

Analyze the impact of strategic behavior on market outcomes, including advertising and inter-firm competition.

---

Definitions:

Resource Dependency

A theory that organizations depend on external resources to function, and their strategies are designed to acquire and maintain these resources.

Closed Systems

Organizations or processes that are self-contained and do not interact or exchange matter with their environment.

Three Needs

A psychological theory suggesting there are three primary needs that motivate human behavior: the need for achievement, affiliation, and power.

Federated Organization

A type of organization characterized by a central governing body connected to independent units or member entities, allowing for both centralized control and decentralized operations.