单选题 As the number of compounding periods increases, what is the effect on the annual percentage rate (APR) and the effective annual rate (EAR)?

A、

A. APR increases, EAR increases.
B、

B. APR increases, EAR remains the same.
C、

C. APR remains the same, EAR increases.

【正确答案】 C

【答案解析】The APR remains the same since the APR is computed as (interest per period)×(number of compounding periods in 1 year). As the frequency of compounding increases, the interest rate per period decreases leaving the original APR unchanged. However, the EAR increases with the frequency of compounding.