Your bank account pays daily interest with an APR of 4.5%.What is the EAR?
A)4.0%
B)4.8%
C)4.5%
D)4.6%
E)4.4%

Name: Your bank account pays daily interest with an APR of 4.5%.What is the EAR? A)4.0% B)4.8% C)4.5% D)4.6% E)4.4%
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Question

Quizplus · Accepted Answer

The Effective Annual Rate (EAR) can be calculated using the formula EAR = (1 + APR/n)^n - 1, where APR is the annual percentage rate and n is the number of compounding periods per year. For daily compounding, n = 365. Therefore, EAR = (1 + 0.045/365)^(365) - 1 ≈ 0.0459 or 4.6%.

Your Bank Account Pays Daily Interest with an APR of 4.5%.What