Question

the difference between effective annual rate of interest with monthly and quarterly compounding, when nominal rate of interest is 10% is;​

Answer 1

Step-by-step explanation:

hope the answer helps u

Answer 2

To check the effective annual rate of interest with a monthly and quarterly combination

Given:

The nominal rate of interest is 100 percent

To Find:

The effective annual rate of interest with a monthly and quarterly combination

Solution:

A certificate of deposit (CD), a bank account, or a loan provided could also be publicized with its nominal rate of interest moreover as its effective annual rate of interest. The nominal rate of interest doesn't mirror the results of combination interest or maybe the fees that go along with this monetary merchandise. The effective annual rate of interest is that the real come back.

Effective annual rate of interest = (1 + (nominal rate / range of combination periods)) ^ (number of combination periods) - one

For investment A, this may be: ten.47% = (1 + (10% / twelve)) ^ one2 - 1

And for investment B, it'd be: ten.36% = (1 + (10.1% / two)) ^ 2 - one

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