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 equivalent to an effective rate of 7.35% per annum, we can use the formula:
(1 + r/n) ^ n - 1 = i
Where:
r = nominal rate of interest
n = number of compounding periods per year
i = effective annual rate
Plugging in the values:
(1 + r/4) ^ 4 - 1 = 0.0735
Solving for r:
(1 + r/4) ^ 4 = 1.0735
1 + r/4 = (1.0735)^(1/4)
1 + r/4 = 1.01778
r/4 = 0.01778
r = 0.0711
Therefore, the nominal rate of interest compounded quarterly equivalent to an effective rate of 7.35% per annum is 7.11%.
Since this is not one of the answer choices provided, we can look for the closest option. The closest option is 7.16%, so the answer is 7.16%.