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Maslowich
3 years ago
15

Determine the effective rate for $1 for 1 year at 5.9% compounded quarterly.

Mathematics
1 answer:
kenny6666 [7]3 years ago
8 0
Keeping in mind that the effective rate, is in effect the APY or Annual Percentage Yield, 

\bf \qquad  \qquad  \textit{Annual Yield Formula}
\\\\
~~~~~~~~~\left(1+\frac{r}{n}\right)^{n}-1
\\\\
\begin{cases}
r=rate\to 5.9\%\to \frac{5.9}{100}\to &0.059\\
n=
\begin{array}{llll}
\textit{times it compounds per year}\\
\textit{quarterly, thus four times}
\end{array}\to &4
\end{cases}
\\\\\\
\left(1+\frac{0.059}{4}\right)^{4}-1\implies (1.01475)^4-1 \approx 0.0603
\\\\\\
0.0603\cdot 100\implies \stackrel{\%}{6.03}
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