Log in
Economics
1
answer
0
watching
122
views
21 Jul 2019

A bank charges a 1.5% per month interest rate compounded monthly.

a) What is the annual NOMINAL interest rate it's charging?

b) What is the EFFECTIVE interest rate it is charging?

Watch
1
answer
0
watching
122
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

A bank pays 10% nominal interest rate on special certificates. What is the effective annual interest rate if interest is:

(a) compounded semiannually
(b) compounded quarterly
(c) compounded daily

CFI Inc. in York County currently studying the following two potential investments: the first investment pays 2% interest per month, compounded monthly, while the second pays 6% interest per 3 months, compounded quarterly.

a) Determine the effective quarterly interest rate for each of the two investments.

b) Determine the effective annual interest rate for each of the two investments.

c) Which investment should CFI Inc. choose?

d) How much should the interest rate be ( per month, compounded monthly) for the first investment so that neither of the two investments is preferred over the other after one year of investment?

Question: Jack deposited $500,000 into a bank for 6 months. At the end of that time, he withdrew the money and received $525,000. If the bank paid interest based on continuous compounding:

(a) What was the effective annual interest rate?

(b) What was the nominal annual interest rate?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in