CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

The effective annual interest rate is ______.

A. always equal to the annual percentage rate
B. greater than the annual percentage rate when the number of compounding periods per year is greater than one
C. less than the annual percentage rate when the number of compounding periods per year is greater than one
Correct Answer: B

User Contributed Comments 4

User Comment
imroark More payments within a year (& compounded) will only see you earning more! Think about it intuitively...
mansi its equal when the compounding period is one year.
Shaan23 C is correct if the number of compounding periods per year is LESS than one.
sasarwar B
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