Question

Find the EAR in each of the following cases: Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 7% Quarterly 17 Monthly 13 Daily 10 infinite

Answer 1

7.19

18.39

13,88

10.51%

Step-by-step explanation:

EAR = (1 + periodic interest rate)^m - 1

m = number of compounding

a. ( 1 + 0.07/4)^4 - 1 = 7.19%

b. (1 + 0.17/12)^12 - 1 = 18.39%

c. (1 + 0.13/365)^365 - 1 = 13.88%

d. EAR =