Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

] A bank quotes an interest rate of 8% pa with quarterly compounding. Note that another way of stating this rate is that it is

]

A bank quotes an interest rate of 8% pa with quarterly compounding. Note that another way of stating this rate is that it is an annual percentage rate (APR) compounding every quarter.

Which of the following statements about this rate is NOT correct? All percentages are given to 5 decimal places.

a. Continuously compounded quarterly rate is 1.98026% per quarter.

b. The annual percentage rate (APR) compounding every month is 7.94725%.

c. Effective monthly rate is 0.66227% per month.

d. Continuously compounded semi-annual rate is 3.85306% per semi-annual.

e. Effective quarterly rate is 2.00000% per quarter.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Capital Markets Institutions And Instruments

Authors: Frank J. Fabozzi, Franco Modigliani

4th Edition

0136026028, 9780136026020

More Books

Students also viewed these Finance questions

Question

T F Once established, a product mix remains eff ective.

Answered: 1 week ago

Question

What is the result of the following code if the user enters 4

Answered: 1 week ago