Q1: You are offered a loan at an APR of 6%, compounded monthly. (a) What is the effective annual rate (EAR)? (b) Another
Posted: Sat Feb 26, 2022 9:12 am
Q1: You are offered a loan at an APR of 6%, compounded monthly.
(a) What is the effective annual rate (EAR)? (b) Another bank wants
to offer you a competing loan, but instead compounds interest
daily. What is the highest daily EPR you would accept?
Q2: Your brokerage company will let you borrow money to invest,
but charges an APR of 9.25%, compounded daily. If you borrow
$10,000 for six months, how much interest would you owe?
(a) What is the effective annual rate (EAR)? (b) Another bank wants
to offer you a competing loan, but instead compounds interest
daily. What is the highest daily EPR you would accept?
Q2: Your brokerage company will let you borrow money to invest,
but charges an APR of 9.25%, compounded daily. If you borrow
$10,000 for six months, how much interest would you owe?