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please help me with the following question, it is about the interest rate with different periods (semi annualy, quarterly, monthly etc.). sometimes when i look
please help me with the following question, it is about the interest rate with different periods (semi annualy, quarterly, monthly etc.). sometimes when i look at the explanation of certain questions, they simply multiply or divide the interest rate to get to the new rate (5% semi annualy = 10% annually). However a few questions later i see them using the EAR formula to calculate this (1 + r/n)^n 1). when do i use what approach? does it have to do with the phrasing of the question, for example "compounded monthly". thanks in advance!
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