If the APR is 12% and interest is compounded monthly, then the EAR is:
A) 12.00%
B) 1.00%
C) 12.68%%
D) 13.0%

Name: If the APR is 12% and interest is compounded monthly, then the EAR is: A) 12.00% B) 1.00% C) 12.68%% D) 13.0%
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Quizplus · Accepted Answer

The formula to convert APR to EAR is: EAR = (1 + APR/n)^n - 1, where n is the number of times the interest is compounded in a year. In this case, n = 12 (monthly compounding), so EAR = (1 + 0.12/12)^12 - 1 = 0.1268 or 12.68%. Therefore, the best choice is C.

If the APR Is 12% and Interest Is Compounded Monthly