Consider a $100 investment paying an EAR of 3.72%, what is the equivalent APR compunded monthly...

Consider a $100 investment paying an EAR of 3.72%, what is the equivalent APR compunded monthly ?

none of the above

3.48%

3.78%

3.66%

3.50%

Solutions

Expert Solution

Effective Annual Rate is a modified rate of return where it considers the compounding effect. Interest on interest is known as compounding.

It is calculated as:

Calculate the Nominal Rate by substituting the values:

The equivalent APR is 3.66%

jeff jeffy answered 1 year ago

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