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AccountingQ&A LibraryYour bank account pays an 8% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? 1. The periodic rate of interest is 2% and the effective rate of interest is 4%. 2. The periodic rate of interest is 8% and the effective rate of interest is also 8%. 3. The periodic rate of interest is 2% and the effective rate of interest is greater than 8%. 4. The periodic rate of interest is 4% and the effective rate of interest is less than 8%. 5. The periodic rate of interest is 8% and the effective rate of interest is greater than 8%.Question

Your bank account pays an 8% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?

1. The periodic rate of interest is 2% and the effective rate of interest is 4%.

2. The periodic rate of interest is 8% and the effective rate of interest is also 8%.

3. The periodic rate of interest is 2% and the effective rate of interest is greater than 8%.

4. The periodic rate of interest is 4% and the effective rate of interest is less than 8%.

5. The periodic rate of interest is 8% and the effective rate of interest is greater than 8%.

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