Your bank account pays a 5% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? The periodic rate of interest is 5% and the effective rate of interest is also 5%. The periodic rate of interest is 1.25% and the effective rate of interest is 2.5%. The periodic rate of interest is 5% and the effective rate of interest is greater than 5%. The periodic rate of interest is 1.25% and the effective rate of interest is greater than 5%. The periodic rate of interest is 2.5% and the effective rate of interest is 5%.
Your bank account pays a 5% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? The periodic rate of interest is 5% and the effective rate of interest is also 5%. The periodic rate of interest is 1.25% and the effective rate of interest is 2.5%. The periodic rate of interest is 5% and the effective rate of interest is greater than 5%. The periodic rate of interest is 1.25% and the effective rate of interest is greater than 5%. The periodic rate of interest is 2.5% and the effective rate of interest is 5%.
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
Problem 1PS
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Your bank account pays a 5% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?
The periodic rate of interest is 5% and the effective rate of interest is also 5%.
The periodic rate of interest is 1.25% and the effective rate of interest is 2.5%.
The periodic rate of interest is 5% and the effective rate of interest is greater than 5%.
The periodic rate of interest is 1.25% and the effective rate of interest is greater than 5%.
The periodic rate of interest is 2.5% and the effective rate of interest is 5%.
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