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johnpaech johnpaech
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Posts: 1098
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6 years ago
The highest effective rate of return you could earn on any of these investments is closest to:
A) 6.250%
B) 6.267%
C) 6.295%
D) 6.310%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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wrote...
#1
6 years ago
C
Explanation:  C) 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%
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