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First Century Bank Wants to Earn an Effective Annual Return

Question 108

Multiple Choice

First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year.The bank uses daily compounding on its loans.By law,what interest rate is the bank required to report to potential borrowers?


A) 9.23 percent
B) 9.38 percent
C) 9.53 percent
D) 9.72 percent
E) 10.00 percent

Correct Answer:

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