The effective annual rate (EAR)for a savings account with a stated APR of 11% compounded daily is closest to:
A)11.57%
B)11.30%
C)11.63%
D)11.46%

Question

Quizplus · Accepted Answer

The effective annual rate (EAR) can be calculated using the formula EAR = (1 + APR/n)^n - 1, where APR is the annual percentage rate and n is the number of compounding periods per year. For daily compounding, n = 365. Plugging in the given APR of 11% or 0.11, we get EAR = (1 + 0.11/365)^(365) - 1 ≈ 0.1163 or 11.63%.

The Effective Annual Rate (EAR)for a Savings Account with a Stated