Answer:
6.3% quarterly
Step-by-step explanation:
The monthly compounded rate is equivalent to a quarterly compounded rate of ...
(1 +0.062/12)^3 -1 = 1.558%
The quarterly compounded rate is ...
6.3%/4 = 1.575%
The 6.3% rate compounded quarterly is the better deal.
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<em>Additional comment</em>
An annual rate r compounded n times per year for m compounding periods is equivalent to a rate of
(1 +r/n)^m -1 . . . per m/n of a year
Then an annual rate of r compounded 12 times per year for 3 months is equivalent to a quarterly (3/12 year = 1/4 year) of ...
(1 +r/12)^3 -1
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An annual rate of r compounded 4 times per year for 1 quarter is equivalent to ...
(1 +r/4)^1 -1 = r/4
