For any number of compounding periods per year greater than 1, EAR will always be greater than the APR.

Question

Quizplus · Accepted Answer

The Effective Annual Rate (EAR) takes into account the effect of compounding on a loan or investment, which means it will always be higher than the Annual Percentage Rate (APR) when there are multiple compounding periods per year. This is because compounding interest over several periods will result in a higher total amount of interest accrued over the year.

For Any Number of Compounding Periods Per Year Greater Than