Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
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What is the effective rate of a credit card whose Annual Interest Rate is 28.99% and compounds daily?
32.89%
33.61%
31.47%
32.43%
Expert Solution
Introduction;
Annual interest rate = 0.2899 or 28.99%
Number of compounding in a year = 365
Effective rate = ?
Effective rate is the rate after taking the compounding effect into account.
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