- 1 Marks
Question
What is the effective rate for an account that pays 9.0% compounded monthly?
A. 9.18%
B. 9.28%
C. 9.38%
D. 9.48%
E. 9.58%
Answer
Answer:
C
Explanation:
The formula for the effective annual rate is (1 + i/n)^n – 1, where i is the nominal rate and n is the number of compounding periods. The effective rate is calculated as 9.38%.
- Tags: Compounded Interest, Effective Rate, Financial Calculations
- Level: Level 1
- Topic: Basics of Business Finance and Financial Markets
- Series: MAY 2021
- Uploader: Kwame Aikins