Post a New Question

Math

posted by .

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 -

    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 -

    (1+r)^12 = 1.03
    1+r = (1.03)^1/12
    1+r = 1.00246627
    r = 0.00246627
    r % = .247 % monthly

Answer This Question

First Name
School Subject
Your Answer

Related Questions

More Related Questions

Post a New Question