Which One of the Following Statements Is TRUE About the Effective

question 29

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 annualized 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:

National Environmental Policy Act

A U.S. environmental law that promotes the enhancement of the environment and established the President's Council on Environmental Quality (CEQ). It requires environmental impact statements for major federal actions significantly affecting the environment.

Environmental Impact Statement

A document prepared to describe the effects proposed activities will have on the environment.

Federal Water Pollution Control Act

is a major U.S. law that regulates the discharge of pollutants into the nation's surface waters, aiming to improve water quality.

Clean Water Act

A United States federal law that regulates the discharge of pollutants into the nation's surface waters, including lakes, rivers, streams, and coastal areas.