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44
An interest rate is 12% per annum with semiannual compounding. What is the equivalent rate with quarterly compounding?
A. 11.83%
B.11.66%
C.11.77%
D.11.92%
A. 11.83%
B.11.66%
C.11.77%
D.11.92%
Answer: A
The equivalent rate per quarter is 1.06^0.5 -1=2.956% . The annualized rate with quarterly compounding is four times this or 11.83%.
The equivalent rate per quarter is 1.06^0.5 -1=2.956% . The annualized rate with quarterly compounding is four times this or 11.83%.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015