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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