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Questions tagged [apr]

Annual Percentage Rate

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Understanding/Calculate effective annual rate and savings

I came across the following exercise: You put $1000 into a savings account today that offers a 5% APR with semi-annual compounding. What is the effective annual rate of the saving account? How much ...
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Why does APR not include compounding?

As I understand it the Annual Percentage Rate (APR) formula does not take compounding into account. It is, in effect, a nominal rate. Why is this? I thought that APR was designed to allow consumers to ...
niemiro's user avatar
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