Chapter 2 Flashcards
1
Q
EAR?
A
Effective annual rate, actual rate of return
2
Q
APR?
A
Annual percentage rate, quoted interest rate
3
Q
Formula for EAR?
A
EAR = (1 + APR/m)^m - 1
4
Q
m=?
A
Number of compounding periods
5
Q
Canadian mortgage contracts are compounded in ___ periods.
A
m=2
6
Q
U.S. mortgage contracts, automobile loans, and credit cards are compounded in ___ periods.
A
m=12
7
Q
EMR?
A
Effective monthly rate
8
Q
Formula for EMR?
A
EMR = (1 + EAR ) ^T - 1
9
Q
To calculate EMR, T=?
A
T=1/12
10
Q
How to calculate annual inflation rate?
A
Inflation = (FV/PV)^1/T
11
Q
A
