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15) More on 'measuring/stating' interest rates - compounding frequencies. 19.56% A.) BankOne quotes you a deposit interest rate of 18% (APR12, annual rate stated with
15) | More on 'measuring/stating' interest rates - compounding frequencies. | ||||||||
19.56% | A.) | BankOne quotes you a deposit interest rate of 18% (APR12, annual rate stated with monthly compounding frequency, e.g. proportional interest payment paid monthly). What is the BankOne's rate expressed as annual effective rate (AER, EAR) ? | |||||||
B.) | If BankTwo pays interest quarterly, what interest rate (APR4, ann. rate stated with comp. freq. 4-times per year) do they have to quote you to make you indifferent between these bank deposit account offers? | ||||||||
C.) | Calculate the above interest rate(s) in terms of the annual rate expressed with continuous compounding ! | ||||||||
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