What is nominal interest rate and effective interest rate

Assignment Help Financial Management
Reference no: EM131445516

You receive a credit card offer with terms of 6.86% interest. When you read the fine print, however, you see that the interest is not the annual percentage rate (APR), but the amount being charged every month. What is the nominal interest rate and the effective interest rate?

Reference no: EM131445516

Questions Cloud

What is the expected price of the stock in a year : A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 2% per year thereafter. The expected rate of return on the stock is 10%. What is the expected price of ..
What was the last fast food item that you consumed : What was the last fast food item that you consumed? Include in your post where you ate, what you ate, the total calories, total fat content of that food, and one other important nutritional fact related to that food item
List the ways we can connect science with literacy using art : How can children learn science using painting, music, poetry, singing, dance? List the ways we can connect science with literacy using the arts?
What is the inventory turnover : Bobaflex corporation has ending inventory of $527,156 and cost of goods sold for the year just ended was $8,543,123. What is the inventory turnover? The days' sales in inventory? How long on average did a unit of inventory sit on the shelf before it ..
What is nominal interest rate and effective interest rate : You receive a credit card offer with terms of 6.86% interest. When you read the fine print, however, you see that the interest is not the annual percentage rate (APR), but the amount being charged every month. What is the nominal interest rate and th..
Evaluate the economic health of the nation or state : Economists prepare economic analysis briefs to provide insight into how economic market forces operate. Assess economic policy recommendations for healthcare stakeholders. Evaluate the economic health of the nation or state
Examine instances in which you believe that it is acceptable : Using the articles and media from the week, examine instances in which you believe that it is acceptable to kill oneself or to sacrifice oneself and then explain instances in which you think that it is not ethically permissible to do so.
Forever by just maintaining current operations : Bill's Money Cleaning can currently generate EPS of 4 per year forever by just maintaining current operations. Shareholders need to earn 12%. Bill pays all the EPS as a dividend. Bill has found a machine for sale that should earn a 15% return on inve..
Senior staff members are less likely to accept change : Consider the following data. Often used interchangeably in dialogue, induction and deduction actually refer to very different processes for making assumptions from data.

Reviews

Write a Review

Financial Management Questions & Answers

  Bonds on the market making annual payments

Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $952. At this price, the bonds yield 6.1 percent. What must the coupon rate be on the bonds?

  How long will it take for your funds to triple

You have $5,000 invested in a bank that pays 3.8% annually. How long will it take for your funds to triple?- If you invest $5,000 today, how many years will it take for your investment to grow to $9,140.20?

  Calculate the price with no growth

Sisters Corp expects to earn $7 per share next year. The firm’s ROE is 12% and its plowback ratio is 80%. If the firm’s market capitalization rate is 10%. Calculate the price with the constant dividend growth model. (Do not round intermediate calcula..

  How much will she take home under each method

Jill Meier is the sole owner of Meier Corp., which provides her only source of income. Jill has always paid herself entirely by drawing dividends fom her corporation. A friend suggested that as long as she is earning about what she would have to pay ..

  Weight of each stock in minimum variance portfolio

Consider two stocks, Stock D, with an expected return of 15 percent and a standard deviation of 31 percent, and Stock I, an international company, with an expected return of 6 percent and a standard deviation of 11 percent. The correlation between th..

  Why is marketing so vital to a new business

Why is marketing so vital to a new business? What challenges do new businesses have when it comes to marketing that established businesses do not? How would you recommend overcoming those challenges?

  Prepare proposal to management showing how happy valley

Happy Valley Yogurt distributes its products nationally and has about 25 percent of the market. It makes a variety of flavors, and about 80 percent of its sales come from individual packages of eight ounces. Prepare a pro-posal to management showing ..

  Callable bond outstanding on the market

Fooling Company has a 10.8 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 105 percent..

  Mature manufacturing firm-reduce the payout

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $12.15, but management expects to reduce the payout by 6 percent per year indefinitely. If you require a return of 10 percent on this stock, what will you pay for a sha..

  Degree of default risk and mature-coupon rate of return

Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. What is your rate of return on ea..

  Sells extended warranties for durable consumer goods

Peace of Mind, Inc. (PMI), sells extended warranties for durable consumer goods such as washing machines and refrigerators. When PMI sells an extended warranty, it receives cash up front from the customer, but later PMI must cover any repair costs th..

  The rates given here include the risk-free rate

The rates given here include the risk-free rate, rRF, and appropriate risk premiums. Today a three-year bond that is, a bond that matures on December 31, 2014- has an interest rate equal to 6 percent. What is the yield to maturity for bonds that matu..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd