jmorales42081 jmorales42081

08-08-2021
Mathematics

contestada

A bank quotes an interest rate as 0.06341 annual effective yield. What interest rate, compounded monthly, will provide that
annual effective interest rate? Round your answer to five decimal places and do not round any intermediate calculations to
less than seven decimal places.

Respuesta :

sqdancefan sqdancefan

08-08-2021

9514 1404 393

Answer:

0.06164

Step-by-step explanation:

The effective annual rate obtained by compounding nominal annual rate r monthly is ...

eff rate = (1 +r/12)^12 -1

Then the value of r is ...

r = 12×((eff rate) +1)^(1/12) -1)

For the given effective rate, that is ...

r = 12×(1.06341^(1/12) -1) ≈ 0.06164 . . . . nominal annual interest rate

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