Determine the effective rate of interest of the following nominal rates. a. nominal rates (Compounded annually) b. nominal rates (Compounded quarterly) c. nominal rates (Compounded continuously) nominal rate = 0.14
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Determine the effective rate of interest of the following nominal rates.
a. nominal rates (Compounded annually)
b. nominal rates (Compounded quarterly)
c. nominal rates (Compounded continuously)
nominal rate = 0.14
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- An interest rate obtained by dividing the nominal rate per year by the number of compounding periods in that year isa. A nominal interest rateb. An effective interest ratec. An effective interest rate only if the compounding period is monthlyd. Either (b) or (c)True Or False 1. The term nominal rate refers to the interest that is usually expressed on a semi-annual basis.What is the difference between computing interest at a nominal annual rate of interest and computing interest at the same nominal annual rate of interest compounded monthly
- To compute for the annual interest payments of a loan, the principal amount is multiplied by: a. Market rate b. Nominal rate c. Amortized rate d. Effective rateIdentify the following interest rates as nominal or effective. Rate 1: 1.5% per quarter Rate 2: 1.5% per quarter, compounded monthly (a) Both are nominal rates (b) Rate 1 is nominal and rate 2 is effective (c) Rate 1 is effective and rate 2 is nominal (d) Both are effective (e) None of the above a b d eCompute the periodic interest rate, as a decimal, given a nominal interest rate and compounding period. Round your answers to four decimal places. a. 6.04%, monthly Periodic Interest Rate (as a decimal) = !3! b. 4.43%, daily Periodic Interest Rate (as a decimal) c. 9.2%, annually Periodic Interest Rate (as a decimal) -
- Find the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 8% . 144.20% 1.94% 36.05% 7.77% b. Nominal interest rate compounded monthly that is equivalent to 3.5% compounded quarterly. 31.78% 2.65% 3.49% 0.29% c. Nominal interest rate compounded monthly that is equivalent to 6% compounded annually. 5.84% 1,214.64% 0.49% 101.22%Interest on a note payable can be calculated by multiplying the amount owed by the interest rate by the fraction of year that represents the time elapsed since borrowing. a. True b. FalseFind the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 8.5% % Round to two decimal places b. Nominal interest rate compounded monthly that is equivalent to 7.5% compounded quarterly % Round to two decimal places c. Nominal interest rate compounded quarterly that is equivalent to 8% compounded annually % Round to two decimal places
- Given an interest rate of 4.0% compounded monthly, determine the effective rate of interest. Answer as a percentage rounded to two decimal places. reff = Check %For compounding more frequently than annual, the effective interest rate Select one: a. equal to the nominal rate b. depends on the amount borrowed c. is lower than the nominal rate d. is higher than the nominal rateAssume an effective compound interest rate i= 3% per annum. Compute the following equivalent rates. In each case, enter your answer as a percentage. a) The nominal interest rate payable semi-annually Number % Enter an answer correct to 4 decimal places. b) The effective interest rate payable quarterly Number Enter an answer correct to 2 decimal places. c) The effective rate of discount per annum Number Enter an answer correct to 2 decimal places. d) The nominal rate of discount payable monthly Number % Enter an answer correct to 4 decimal places.