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The interest is compounded quarterly

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Reference no: EM131972544

1. Your bank account pays an 8% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?

a.   The periodic rate of interest is 2% and the effective rate of interest is 4%.

b.   The periodic rate of interest is 8% and the effective rate of interest is greater than 8%.

c.   The periodic rate of interest is 4% and the effective rate of interest is less than 8%.

d.   The periodic rate of interest is 2% and the effective rate of interest is greater than 8%.

e.   The periodic rate of interest is 8% and the effective rate of interest is also 8%.

2. Which of the following statements is most correct?

Corporations are allowed to exclude 70% of their interest income from corporate taxes.

Corporations are allowed to exclude 70% of their dividend income from corporate taxes.

Individuals pay taxes on only 30% of the income realized from municipal bonds.

Individuals are allowed to exclude 70% of their interest income from their taxes.

Individuals are allowed to exclude 70% of their dividend income from their taxes

Reference no: EM131972544

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