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Author Question: The EAR is 5.85 if the APR is 5.85 and compounding is annual. Indicate whether the statement is ... (Read 92 times)

geodog55

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on: Jul 10, 2018
The EAR is 5.85 if the APR is 5.85 and compounding is annual.
 
  Indicate whether the statement is true or false.

Question 2

Beta is a more relevant measure of risk to an investor with a well-diversified portfolio than to an investor who holds only one stock.
 
  Indicate whether the statement is true or false


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hollysheppard095

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: TRUE
Explanation: With APR = 5.85, C/Y = 1, periodic interest rate = r = 0.0585, we have:
EAR = (1 + periodic rate)C/Y - 1 = (1.0585)1 - 1 = 1.0585 - 1 = 0.0585 or 5.85 as the EAR.

Answer to Question 2

TRUE


geodog55

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Reply #2 on: Jul 10, 2018
Thank you :)


hollysheppard095

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Reply #3 on: Jul 10, 2018
Happy to help you


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