Question

In: Finance

What is the annual compounded monthly rate equivalent to 19% per annum compounded per quarter?

What is the annual compounded monthly rate equivalent to 19% per annum compounded per quarter?

Solutions

Expert Solution

Rate per compunded quarterly = 19%

EAR = ((1+APR/4)^4) - 1

0.19 = ((1+APR/4)^4) -1

1.19 = (1+APR/4)^4

1.19^1/4 = 1+APR/4

1.04444780217 = 1+APR/4

APR = 0.04444780217 * 4

APR = 17.78%

EAR for monthly compounded = (1+APR/12)^12 - 1

= (1+0.1778/12)^12 - 1

= 19.30%


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