The EAR is about 6.09% if the APR is 6.01% and compounding is monthly
Indicate whether the statement is true or false.
Answer: FALSE
Explanation: With APR = 6.01%, C/Y = 12, periodic interest rate = r = 0.0050083, we have:
EAR = (1 + periodic rate)C/Y - 1 = (1.0050083)12 - 1 = 1.061783 - 1 = 0.061783, or about 6.18%.
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