When you see the effective annual rate in the exam, which CFAI Reading will it be from? Here is a simple EAR question: For an 180 day loan with loan rate = 8%, what is the effective annual rate? Why is it higher than 8%?

a do what now?

The second question is for myself. It’s offensive to a L3 candidate. I know that.

deriv108 Wrote: ------------------------------------------------------- > The second question is for myself. It’s offensive > to a L3 candidate. I know that. Compounding. It means 4% for 180 days and then 4% again for 180 days. Do you think it will total 8%? (1.04 x 1.04) - 1 = 8.16%

My mind doesn’t work sometimes. I live in EST time zone. In L3, the “effective annual rate” could be 1) effective annual loan rate(ss15) 2) effective annual lease/interest rates at cash&caerry arbitrage(ss13). Anywhere else?