The lowest effective rate of return you could earn on any of these investments is closest to:
A) 6.250%
B) 6.267%
C) 6.100%
D) 6.300%

Question

Quizplus · Accepted Answer

A) EAR (A) = (1 + APR / k)^k - 1 = (1 + .0625 / 1)¹ - 1 = .0625 or 6.250% EAR (B) = (1 + APR / k)^k - 1 = (1 + .0610 / 365)³⁶⁵ - 1 = .06289 or 6.289% EAR (C) = (1 + APR / k)^k - 1 = (1 + .06125 / 4)⁴ - 1 = .06267 or 6.267% EAR (D) = (1 + APR / k)^k - 1 = (1 + .0612 / 12)¹² - 1 = .06295 or 6.300%

The Lowest Effective Rate of Return You Could Earn on Any