Your bank account pays a 5% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?
A. The periodic rate of interest is 5% and the effective rate of interest is also 5%.
B. The periodic rate of interest is 1.25% and the effective rate of interest is 2.5%.
C. The periodic rate of interest is 5% and the effective rate of interest is greater than 5%.
D. The periodic rate of interest is 1.25% and the effective rate of interest is greater than 5%.
E. The periodic rate of interest is 2.5% and the effective rate of interest is 5%.
Answer: D
You might also like to view...
Which of the following measures a company's ability to pay its current liabilities?
a. earnings per share b. inventory turnover c. current ratio d. number of times interest charges earned
External users of accounting information manage and operate the company.
Answer the following statement true (T) or false (F)
A business organization cannot obtain insurance on the life of a person, even on the life of an individual who is important to that organization
Indicate whether the statement is true or false
________ is a telecommunications network that enables users to make short-range wireless connections to the Internet or another network
Fill in the blank(s) with correct word