Find the nominal rate of interest compounded quarterly, which is equivalent to an effective rate of 7.35 % per annum.
7.35 %
7.16 %
7.56 %
0.06 %
0.29 %
To find the nominal rate of interest compounded quarterly, we can use the formula:
\(1 + \frac{r}{n}\)^n = 1 + i\)
Where:
r = nominal rate of interest
n = number of compounding periods per year
i = effective rate of interest
Plugging in the values:
\(1 + \frac{r}{4}\)^4 = 1 + 0.0735
\(1 + \frac{r}{4}\)^4 = 1.0735
\(\frac{r}{4} = \sqrt[4]{1.0735} - 1\)
\(\frac{r}{4} = 0.0178\)
r = 0.0712 or 7.12%
Therefore, the nominal rate of interest compounded quarterly which is equivalent to an effective rate of 7.35% per annum is 7.12%.
So, the closest option is 7.16%.