Charter bank pays a 5.00% nominal rate on deposits, with monthly compounding. what effective annual rate (eff%) does the bank pa

Question

liubo4ka [24]

3 years ago

8

Charter bank pays a 5.00% nominal rate on deposits, with monthly compounding. what effective annual rate (eff%) does the bank pa

y?

Business

1 answer:

mel-nik [20] · Answer 1 · 2022-02-14T00:38:03+03:00

mel-nik [20]3 years ago

6 0

In order to compute for the effective annual rate, the working equation would be [( 1 + i/n)^n] – 1. The i corresponds to the nominal rate while n is the number of compounding periods per year which in this case is 12. The answer would be 5.116%.