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Which of the following statements is true? a
Which of the following statements is true?
a. If interest is compounded more than once a year, the nominal annual rate is greater than the effective annual rate.
b. If interest is compounded once a year, the nominal annual rate and the effective annual rate are equal.
c. If interest is compounded more than once a year, the effective annual rate is greater than the nominal annual rate.
d. (a) and (b) are both correct.
e. (b) and (c) are both correct
Expert Solution
a. is wrong while b and c are correct because when EAR is more when compounding is more than once
(b) and (c) are both correct
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