Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Calculate the effective interest rate per month for an interest rate of 14% in continuously compounded account?
a. 1.488%
b. 1.258%
c. 1.671%
d. 1.174%
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- Suppose your credit card issuer states that it charges a 19.25% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate? a. 21.04% b. 19.25% c. 20.18% d. 20.68% e. 20.51%arrow_forwardFind the APR of the loan given the amount of the loan, the number and type of payments, and the add-on interest rate. Loan amount, $9,000; three yearly payments; rate = 8% The annual percentage rate is%. (Type an integer or a decimal.)arrow_forwardJournal Entries (Note Received, Renewed, and Collected) Jan. Received a 30-day, 6% note in payment for merchandise sale of $20,000. 16 Feb. Received $100 (interest) on the old (January 16) note; the old note is renewed for 30 15 days at 7%. Mar. Received principal and interest on the new (February 15) note. 17 19 Received a 60-day, 6% note in payment for accounts receivable balance of $8,000. May Received $80 (interest) plus $1,000 principal on the old (March 19) note; the old note 18 renewed for 60 days (from May 18) at 6%. July Received principal and interest on the new (May 18) note. 17 Prepare general journal entries for the transactions. Assume 360 days in a year. Page: 1 ACCOUNT TITLE DOC. POST. NO. REF. DATE DEBIT CREDIT 20-- 1 Jan. 16 3 4 Feb. 15 4 6 7 8 9 Mar. 17 9 10 10 11 11 12 12 13 Mar. 19 13 14 14 15 15 16 May 18 16 17 17 18 18 19 19 20 20 21 July 17 21 22 22 23 23 24 24 inarrow_forward
- The effective annual rate (EAR) for a loan with a stated APR of 4% compounded quarterly is closest to: O A. 4.87% B. 5.28% C. 4.47% D. 4.06%arrow_forwardThe nominal interest rate compounded quarterly, ¿(4) is 6%. Let ¿ be the annual effective interest rate, d be the annual effective discount rate, d(12) be the nominal discount rate compounded monthly and be the annual constant force of interest. Calculate i + 2d + 3d(¹2) + 46. A 59.14% B 59.34% C 59.54% D 59.74% E 59.94%arrow_forward3. A bank offers an account with an APR of 5.8% and an EAR of 5.88%. How does the bank compound interest for this account?A) weekly compoundingB) monthly compoundingC) semiannual compoundingD) annual compoundingarrow_forward
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