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Your firm can borrow from its bank for one month. The loan will have to be rolled over at the end of the month, but
Your firm can borrow from its bank for one month. The loan will have to be "rolled over" at the end of the month, but you are sure the rollover will be allowed. The nominal interest rate is but interest will have to be paid at the end of each month, so the bank interest rate is monthly compounding. Alternatively, your firm can borrow from an insurance company at a nominal rate that would involve quarterly compounding. What nominal rate with quarterly compounding would be equivalent to the rate charged by the bank? a b c d e
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