A - continuous interest rate
B - effective annual interest rate
C - simple annual interest rate
D - discounted annual interest rate
E - compounded annual interest rate
Answer?
This question seems to be missing something or that bank, if real and not somewhere in Wonderland, is trying to pull a fast one! As already answered, were it possible without divine assistance to derive a 9.08% yield from only 12 months at 5.45% then it might be called an effective annual rate, as in B. But it appears, as bankers are want to do, that there is a very-small-print, "up-to" foot note somewhere that alters the meaning of that account offering, and the qualifications of those entitled to partake in it.
It's called EAR ( B)
But an APR of 5.45% compounded daily equals an EAR of 5.6%, not 9.08%.
So...If it is an "easy" answer...why do you place it on this forum??? And yes I agree it is easy..
B
A bank just started a new savings account that has a 5.45% rate compounded daily. The bank identifies that the 5.45% rate is equivalent to a 9.08% rate that is compounded annually? What do we call the 9.08% rate in this example?
A - continuous interest rate
B - effective annual interest rate
C - simple annual interest rate
D - discounted annual interest rate
E - compounded annual interest rate
THANKS!
