б. ( You are given a loan on which interest is charged over a 4-year period, as follows: i. an effective rate of discount of 6% for the first year; ii. a nominal rate of discount of 4% compounded quarterly for the second year; iii. a nominal rate of interest of 5% compounded semiannually for the third year; and iv. a force of interest of 5% for the fourth year. Calculate the annual effective rate of interest over the 4-vear period.

б. ( You are given a loan on which interest is charged over a 4-year period, as follows: i. an effective rate of discount of 6% for the first year; ii. a nominal rate of discount of 4% compounded quarterly for the second year; iii. a nominal rate of interest of 5% compounded semiannually for the third year; and iv. a force of interest of 5% for the fourth year. Calculate the annual effective rate of interest over the 4-vear period.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 8SCQ: You open a 5-year CD for 1,000 that pays 2 interest, compounded annually. What is the value of that...

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