Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A bank quotes an interest rate of 9% pa with quarterly compounding. Note that another way of stating this rate is that it is an

A bank quotes an interest rate of 9% 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.

Effective monthly rate is 0.64756% per month.

b.

Continuously compounded quarterly rate is 2.22506% per quarter.

c.

The annual percentage rate (APR) compounding every month is 8.93333%.

d.

Continuously compounded semi-annual rate is 4.45012% per half year.

e.

Effective quarterly rate is 2.25000% 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

Innovation And Technology

Authors: Nikos Vernardakis

1st Edition

0415676800, 978-0415676809

More Books

Students also viewed these Finance questions

Question

e. What difficulties did they encounter?

Answered: 1 week ago