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Warren is about to deposit his savings of 100,000 and is considering three banks. All these banks offer a nominal annual interest rate of 12
Warren is about to deposit his savings of 100,000 and is considering three banks. All these banks offer a nominal annual interest rate of 12 per cent, but they all offer different compounding periods. Banks 1, 2 and 3 offer semi-annual, quarterly and monthly compounding respectively. What is the effective annual interest rate offered by each bank? Explain the difference between the nominal annual interest rate and the effective annual interest rate.
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