Homework Answers
Bank A
| EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100 |
| ? = ((1+5/(12*100))^12-1)*100 |
| Effective Annual Rate% = 5.1162 |
Bank B
| EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100 |
| ? = ((1+4.897/(365*100))^365-1)*100 |
| Effective Annual Rate% = 5.0185 |
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