In the interest formula,the interest rate is on a(n)________ basis;therefore,the time variable must reflect how many ________ out of ________ in the interest period.
A)monthly;months;6
B)annual;years;1
C)monthly;months;12
D)annual;months;12

Question

Quizplus · Accepted Answer

Because interest rates are always stated as an annual percentage even if the note is for less than a year,the time period is the portion of a year for which interest is calculated.Ask yourself how many months out of 12 or how many days out of 365 the interest period covers.

In the Interest Formula,the Interest Rate Is on A(n)________ Basis;therefore,the