The effective rate exceeds the nominal rate when the interest is compounded more than once a year resulting in a larger effective rate.

Name: The effective rate exceeds the nominal rate when the interest is compounded more than once a year resulting in a larger effective rate.
Brand: Quizplus
Rating: 4.8 (37 reviews)

Question

Quizplus · Accepted Answer

This statement is true. When interest is compounded more than once a year, the effective rate takes into account the compounding of interest, resulting in a higher effective rate than the nominal rate.

The Effective Rate Exceeds the Nominal Rate When the Interest