Entered Answer Preview Result correct (I(1+r)*21-1)y2 incorrect correct At least

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Entered Answer Preview Result correct (I(1+r)*21-1)y2 incorrect correct At least one of the answers above is NOT correct (1 point) An account initially contains an amount Ao After 1 year, simple interest at rate r per year, is applied to the account, resulting in amount A1 A (1+r) What is the effective annual rate of return rA? Your answer should be a function of r alone. Type r as r. An account initially contains an amount Bo- After 2 years, simple interest at rate r per year, is applied to the account, resulting in amount What is the effective annual rate of return B? TB1+r)2-1)/2 Your answer should be a function of r alone. Type r as r Taylor expansion of the tunction TB(r) gives r(ror) Select the true inequalilty: For small positive r

Explanation / Answer

Ans B)

Answer for this queston is "r" Because when no compouding period is given then nominal interest rate ie simple interest rate is effective annual rate

Effective annual rate is generally deals with compounding if compounding period is mentioned in our case which is not

Please check with "r" and let me know to improve on incorrect answer in comment

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