The effective annual rate (rEAR) considers the effect of compounding, whereas annual percentage rate (APR) does not consider the effect of compounding.
Answer the following statement true (T) or false (F)
True
Effective annual rate is the annual rate of interest actually being earned, as opposed to the quoted rate. It considers the compounding of interest. Annual percentage rate is another name for the simple interest rate, and it does not consider the effect of interest compounding. See 4-5: Annual Percentage Rate (APR) and Effective Annual Rate (EAR)
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What will be an ideal response?
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Fill in the blank(s) with the appropriate word(s).
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Answer the following statement true (T) or false (F)