Question
Bank A offers loans at an 8% nominal rate (its APR) but requires that interest be paid quarterly; that is, it uses quarterly compounding. Bank
Bank A offers loans at an 8% nominal rate (its APR) but requires that interest be paid quarterly; that is, it uses quarterly compounding. Bank B wants to charge the same effective rate on its loans but it wants to collect interest on a monthly basis, that is use monthly compounding.
What nominal rate must Bank B set?
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Financial Management
Authors: Geoffrey Knott
4th Edition
1403903824, 9781403903822
