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Given i(4) = 3.150%, find the equivalent effective bi-weekly rate. O a. 0.11592% O b. 0.11954% O c. 0.10988% O d. 0.12075% O e. 0.11351% Certainty✪ : OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)

Given i(4) = 3.150%, find the equivalent effective bi-weekly rate. O a. 0.11592% O b. 0.11954% O c. 0.10988% O d. 0.12075% O e. 0.11351% Certainty✪ : OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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8) the math of interest. please indicate if you are unsure or totally sure about the answer

Given i(4) = 3.150%, find the equivalent effective bi-weekly rate. 0.11592% O b. 0.11954% a. C. 0.10988% O d. 0.12075% e. 0.11351% Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
Transcribed Image Text:Given i(4) = 3.150%, find the equivalent effective bi-weekly rate. 0.11592% O b. 0.11954% a. C. 0.10988% O d. 0.12075% e. 0.11351% Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
Expert Solution
Calculation of effective annual rate

Interest rate (r) = 3.15% 

Number of compounding in a year (n)= 4

 

Effective annual rate = (1+(r/n))n - 1

Effective annual rate = (1+(0.0315/4))4 - 1

Effective annual rate = (1+0.007875)4 - 1

Effective annual rate = (1.007875)4 - 1

Effective annual rate = 1.03187405108813 - 1

Effective annual rate = 0.03187405108813

Effective annual rate = 3.187405108813%

 

 

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