Question

Guided Practice

Assume that 4.5% is an annual interest rate. Find the interest rate for an account that is compounded quarterly and monthly.


A.
1.125%; 0.375%


B.
18%; 54%


C.
0.9%; 0.45%

Answer 1

A.

1.125%; 0.375%

Explanation:

Quarterly interest rate is 4.5 / 4 = 1.125%.

Monthly rate is 4.5 / 12 = 0.375%.