The effective annual interest rate (EAR) is the true cost of borrowing and lending.

Name: The effective annual interest rate (EAR) is the true cost of borrowing and lending.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The effective annual interest rate (EAR) takes into account not only the nominal interest rate but also the compounding frequency, fees, and other costs associated with borrowing or lending. Therefore, it provides a more accurate measure of the true cost of borrowing or lending than the nominal rate alone.

The Effective Annual Interest Rate (EAR) Is the True Cost