Question

If the nominal rate of interest is 5.25% compounded quarterly, what is the effective
rate?​

Answer 1

Answer:

I hope I helped you thankyou

Step-by-step explanation:

The quarterly interest is 5.25%/4=1.3125%.

Since interest is compounded quarterly, the total interest at the end of the year for an investment of 1000 is:

1000*1.013125^4

=1053.54

So the effective interest is

53.54/1000=5.354% (approximately)