The correct way to annualise an interest rate is to compute the effective annual interest rate.

Name: The correct way to annualise an interest rate is to compute the effective annual interest rate.
Brand: Quizplus
Rating: 4.9 (56 reviews)

Question

Quizplus · Accepted Answer

Annualising an interest rate simply means calculating the equivalent rate for a full year. To do this accurately, the effective annual interest rate needs to be calculated, which takes into account the compounding of interest over the year. Therefore, the statement is true.

The Correct Way to Annualise an Interest Rate Is to Compute