The formula of effective annual return is written as _____________?

A. (1+r) c – 1
B. (2+r) c – 2
C. (3+r) c – 3
D. (1+r) c – 5

The formula and calculations are as follows: Effective annual interest rate = (1 + (nominal rate ÷ number of compounding periods)) ^ (number of compounding periods) – 1. For investment A, this would be: 10.47% = (1 + (10% ÷ 12)) ^ 12 – 1. And for investment B, it would be: 10.36% = (1 + (10.1% ÷ 2)) ^ 2 – 1.

Related Mcqs:

The participants of financial system reduce the demand for their funds if the economic growth in _____________?
A. domestic market is stagnant
B. domestic market is not stagnant
C. global market is stagnant
D. global market is not stagnant
The decrease in present value at decreasing rate only, when there is _____________?
A. increase in availability
B. decrease in availability
C. decrease in interest rate
D. increase in interest rate
The liquidity premium theory, unbiased expectations theory and market segmentation theory are the theories to describe _____________?
A. term structure of segmentation
B. term structure of interest rate
C. term structure of premium
D. term structure of inflation
The shift of demand curve to down and then to the left resulting in _____________?
A. support from World Bank
B. decreases in funds traded
C. increase in funds traded
D. rise of international funds
The monetary expansion decreases and there is an increase in equilibrium interest rate then supply curve of funds must shift _____________?
A. down and to the left
B. down and to the right
C. up and to the left
D. up and to the right
According to demand for funds curve, the demand curve shifts down and to the left if there is a decrease in _____________?
A. equilibrium supply
B. equilibrium savings
C. equilibrium demand
D. equilibrium interest rate
The interest rate considering compounding of interest rate and is earned in 12 months, is considered as _____________?
A. effective annual return
B. ineffective annual return
C. decrease in return
D. increase in return
The special provisions that can have adverse or beneficial effects and are reflected in interest rates do not include _____________?
A. tax-ability
B. covert ability
C. call ability
D. inflation premium
The loans for education and medical is classified as loans for _____________?
A. equilibrium goods
B. non-equilibrium goods
C. durable goods
D. non-durable goods
The interest rate which is not reinvested but is earned is classified as _____________?
A. invested interest
B. simple interest
C. earned interest
D. unstated interest