Your bank account pays a 6% nominal rate of interest. The interest is compounded
ID: 2675736 • Letter: Y
Question
Your bank account pays a 6% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?Answer
The periodic rate of interest is 1.5% and
the effective rate of interest is 3%.
The periodic rate of interest is 6% and the effective rate of interest is greater than 6%.
The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%.
The periodic rate of interest is 3% and the
effective rate of interest is 6%.
The periodic rate of interest is 6% and the
effective rate of interest is also 6%.
Explanation / Answer
The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%.