If nominal interest rate is 12% and it is compounded monthly, what is the effective interest rate per interest period?
Question
Solution 1
To calculate the effective interest rate per interest period when the nominal interest rate is 12% and it is compounded monthly, you can use the formula for the effective annual rate (EAR):
EAR = (1 + i/n)^(nt) - 1
where: i = nominal interest rate = 12% = 0.12 n = number of compounding periods per Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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