Q504
Formula of effective annual return is written as
A.
(1+r) c - 1
AnswerB.
(2+r) c - 2
C.
(3+r) c - 3
D.
(1+r) c - 5
Answer: Option A
Solution
Answer: Option A
Solution:
Formula of effective annual return is written as (1+r) c - 1. Effective annual return (EAR) is the annual rate that captures the magnifying effect of multiple compounding periods per year of an investment.