theresamarieuehling2
20.10.2020 •
Business
Let’s say there is an investment product whose Annual Percentage Rate (APR) is 8%. If this investment product compounds quarterly (that is, four times a year), what will be the Effective Annual Interest Rate (EAR)?
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Ответ:
Effective annual interest rate= 8.24%
Explanation:
Giving the following information:
Interest rate= 8% compounded quarterly
First, we need to calculate the nominal quarterly interest rate:
i= 0.08/4= 0.02
Now, the effective annual interest rate:
effective annual interest rate= (1+i)^n - 1
effective annual interest rate= 1.02^4 - 1
effective annual interest rate= 0.824 = 8.24%
Ответ:
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