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Find the effective annual rate associated with an 8% nominal rate when interest rate is compounded annually
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Solved in 3 steps
- Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?Estimate the effective annual rate (EAR) for a continuously compounded annual nominal rate of 9.00%.You are told that the nominal rate of interest is 3.46% per quarter year payable monthly. Calculate the equivalent effective annual rate of interest.
- if the nominal rate is 11.5% per year compounded continuously, what is the equivalent effective rate of interest per bi monthIf the nominal rate is 16.5% per year compounded quarterly, what is the equivalent effective rate of interest per three yearsIf the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be:
- Calculate the APR for a 10% per annum nominal rate of interest that is compounded (a) 2 times per year, (b)4 times per year, (c) continuously.If the effective annual interest rate is 8%, what is the nominal annual rate if compounding is bi-monthly?Find the nominal rate compounded semi annually which is equivalent to 20% compounded quarterly. What is the corresponding effective rate?
- Given the nominal rate of 12% per year compounded continuously, find a) Effective interest rate per year b) Effective per two years c) Effective per semi annual d) Effective per month e) Effective per quarterDetermine the annual rate of interest compounded daily that is equivalent to 9% per annum compounded monthlyFind the interest rates in the situation as: The effective annual interest rate is 11.02% and compounding is monthly. Find the nominal interest rate.
