A bank offers depositors a nominal 4% pa, with interest payable quarterly. What is the effective annual rate of interest?
A、1%
B、4%
C、1.025%
D、4.06%
A、1%
B、4%
C、1.025%
D、4.06%
【参考答案及解析】
Effective quarterly rate = 1% (4% + 4) Effective annual rate = [(1.01)4 - 1] = 0.0406 = 4.06% pa You should have been able to eliminate options A and B immediately. 1% is simply 4% + 4 = 1%. 4% is the nominal rate and is therefore not the effective annual rate of interest.
Effective quarterly rate = 1% (4% + 4) Effective annual rate = [(1.01)4 - 1] = 0.0406 = 4.06% pa You should have been able to eliminate options A and B immediately. 1% is simply 4% + 4 = 1%. 4% is the nominal rate and is therefore not the effective annual rate of interest.