An APR will be equal to an effective annual rate if:
A)Simple interest is used
B)Compounding occurs continuously
C)Compounding occurs annually
D)An error has occurred; these terms cannot be equal

Question

Quizplus · Accepted Answer

The APR will be equal to the effective annual rate when compounding occurs annually because there is no intra-year compounding to account for, making the nominal and effective rates the same.

An APR Will Be Equal to an Effective Annual Rate