1. A credit card charges interest at an APR of 10% on credit card loans, and the interest is compounded monthly. What is

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1. A credit card charges interest at an APR of 10% on credit
card loans, and the interest is compounded monthly. What is the
effective annual rate (EAR) of the interest charge?
a. 10%
b. 8.7%
c. 10.5%
d. 11.3%
2. Which one of the following statements is correct?
Multiple Choice
a. When the positive interest rate increases, the present value
decreases. All else held constant.
b. An increase in time increases the future value given a zero
rate of interest. All else held constant.
c. Time and future values are inversely related, all else held
constant.
d. Interest rates and time are positively related, all else held
constant.