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Math

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Bank A is offering an interest rate of 6.60% compounded monthly, while bank B is offering an interest rate of 6.67% compounded quarterly.

The effective rate offered by bank A =?%,

while the effective rate offered by bank B = ?%.

  • Math -

    (1 + i/n)^n - 1

    A

    (1+.066/12)^12 - 1 = .0680 = 6.80 %

    B

    (1+.0667/4)^4 - 1 = .0684 = 6.85%

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