Posted by **Amanda** on Friday, November 23, 2012 at 11:21am.

Find the effective rate corresponding to the given nominal rate. (Round your answer to the nearest hundredth of a percentage point.)

(a) 4%/year, compounded quarterly

? %

(b) 3%/year, compounded monthly

? %

- Math -
**Reiny**, Friday, November 23, 2012 at 1:01pm
let the effective rate in each case be i

a)

so (1+i)^1 = 1.-1^4

1+i = 1.040604

i = .040604 = 4.06%

f)

3% compounded monthly --- monthly rate of .0025

1+i = 1.0025^12 = 1.0304059..

rate = .0304 or 304%

- Math -
**angela**, Tuesday, November 27, 2012 at 4:08pm
(1+r)^12 = 1.03

1+r = (1.03)^1/12

1+r = 1.00246627

r = 0.00246627

r % = .247 % monthly

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