Calculate the Effective Annual Rate for 5% P

question 20

Multiple Choice

Calculate the effective annual rate for 5% p.a. compounded semi-annually.

• A) 0.050625
• B) 5.0625%
• C) 0.0255%
• D) 2.55%
• E) 15.0625%

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Definitions:

Life Insurance

A type of insurance that pays out a sum of money either on the death of the insured person or after a set period, intended primarily to provide financial protection to beneficiaries.

Health Insurance

An insurance policy designed to cover the cost of medical and surgical procedures for the person insured.

Restitution

Compensatory measures taken to restore a party harmed by a breach of contract or wrong to their original position before the violation occurred.

Disaffirmance

The legal right of a party, usually a minor, to renounce or void a contract, thereby releasing them from any obligations.