If interest is paid m times per year, then the per-period interest rate equals the:
A) effective annual rate divided by m.
B) compound interest rate times m.
C) effective annual rate.
D)annual percentage rate divided by m.

Question

Quizplus · Accepted Answer

The per-period interest rate is the APR, which is divided by the number of compounding periods per year, m. Option A is incorrect as it refers to the calculation of the effective interest rate. Option B is incorrect as it multiplies the compound interest rate by m, which would result in an incorrect per-period interest rate. Option C is incorrect as it refers to the effective annual rate, which is not the same as the per-period interest rate.

If Interest Is Paid M Times Per Year, Then the Per-Period