Multiple Choice
Your bank account pays an 8% nominal rate of interest.The interest is compounded quarterly.Which of the following statements is CORRECT?
A) The periodic rate of interest is 8% and the effective rate of interest is also 8%.
B) The periodic rate of interest is 2% and the effective rate of interest is 4%.
C) The periodic rate of interest is 8% and the effective rate of interest is greater than 8%.
D) The periodic rate of interest is 4% and the effective rate of interest is less than 8%.
E) The periodic rate of interest is 2% and the effective rate of interest is greater than 8%.
Correct Answer:
Verified
Correct Answer:
Verified
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