The two-year interest rate of 30 3⁄4% is equal to what nominal rate of interest convertible...

Question

Question

The two-year interest rate of 30 3⁄4% is equal to what nominal rate of interest convertible quarterly?

business finance

Answer 1

Answer #1

Hi

two year Effective interest rate EAR= 30 3/4 %

= 123/4 %

nominal quarterly rate = (1+EAR)^(1/n)-1

Here n = 8 since in 2 years, there are 8 quarters

nominal quarterly rate = (1+123/4%)^(1/8)-1

= 1.3075^(1/8)-1

= 0.034083

=3.41%

Thanks

Add a comment

Answer 2

Similar Homework Help Questions

Find the nominal rate of discount, convertible monthly, that is equivalent to a nominal rate of...

Find the nominal rate of discount, convertible monthly, that is equivalent to a nominal rate of interest of 6% , convertible quarterly.
1) Investment X for 100,000 is invested at a nominal rate of interest, j, convertible semi-annually....

1) Investment X for 100,000 is invested at a nominal rate of interest, j, convertible semi-annually. After four years, it accumulates to 214,358.88. Investment Y for 100,000 is invested at a nominal rate of discount, k, convertible quarterly. After two years, it accumulates to 232,305.73. Investment Z for 100,000 is invested at an annual effective rate of interest equal to j in year one and an annual effective rate of discount equal to k in year two. Calculate the value...
Ramon is approved for a 8 year loan of 45,000 at nominal rate of interest convertible...

Ramon is approved for a 8 year loan of 45,000 at nominal rate of interest convertible semiannually of 8.2432 percent. He will be making monthly payments at the end of each month. a. What is his monthly payment?

If the nominal annual rate of interest convertible monthly is 2% find the corresponding equivalent nominal...

If the nominal annual rate of interest convertible monthly is 2% find the corresponding equivalent nominal annual rate of discount convertible semiannually.
Alex loans Nomar $100,000 at a rate of 12% nominal interest convertible quarterly. They agree that...

Alex loans Nomar $100,000 at a rate of 12% nominal interest convertible quarterly. They agree that Nomar will repay the loan by making quarterly payments. These payments will each be $23,000 except for the last payment which will be a balloon payment. Find the amount of the balloon payment. (Round your answer to the nearest cent.)
Can you show the work? and double-check if this is the right answer? Thanks! The two-year...

Can you show the work? and double-check if this is the right answer? Thanks! The two-year interest rate of 30 34% is equal to what nominal rate of interest convertible quarterly? A. The answer does not appear here B.3.41% C.5.738% OD. 13.63% E. 13.71%

A loan of $10,000 is to be repaid by 20 equal quarterly payments at a nominal...

A loan of $10,000 is to be repaid by 20 equal quarterly payments at a nominal interest rate of 6% per year compounded semiannually. The first payment is at the end of the first quarter. What is the size of each payment? Calculate the payment by (1) finding the equivalent interest rate convertible at the same frequency as payments. (2) using the formula (“Fusion” method). (Answer: $581.82) mathematical interest theory/financial math
At what nominal rate of interest, convertible monthly, is $10,000 the present value of $164.64 paid...

At what nominal rate of interest, convertible monthly, is $10,000 the present value of $164.64 paid at the beginning of each month for 7 years? Round your answer to 3 decimal places.
1. If the nominal interest rate of is 2% per quarter, what is the nominal rate...

1. If the nominal interest rate of is 2% per quarter, what is the nominal rate per year ? 2. $100 of interest is paid each month on an investment of $10000, if the interest is compounded monthly at the end of 2 years, what is the accumulation at the end of two years ? 3. An individual wishes to deposit an amount of money now to have an accumulation of $500 at the end of five years. If the...

A bank customer takes out a loan of 500 with a 16% nominal interest rate convertible quarterly. The customer makes paym...

A bank customer takes out a loan of 500 with a 16% nominal interest rate convertible quarterly. The customer makes payments of 20 at the end of each quarter. Calculate the amount of principal in the fourth payment. There is not enough information to calculate the amount of principal.