Find the effective interest rate (effective annual yield) of an investment that pays 10% per year (quoted or nominal rate) with the interest reinvested quarterly. a. .116 b. .199 c. .104 8 d. 188 The effective interest rate (effective annual vield) is the actual percentage interest paid by the bank

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.