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0 300 periodic rate IpER. 300 0 100 h. (1) Define the stated (quoted) or nominal rate INOM as well as the periodic rate (2)
0 300 periodic rate IpER. 300 0 100 h. (1) Define the stated (quoted) or nominal rate INOM as well as the periodic rate (2) Will the future value be larger or smaller if we compound an initial amount often than annually--for example, every 6 months, or semiannually-holding the stated interest rate constant? Why? (3) What is the future value of $100 after 5 years under 12% annual compounding?! Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? (4) What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily? Will the effective annual wote 1
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