Question

In: Finance

An investment with weekly compounding has an effective rate of 0.123. The nominal rate is:

An investment with weekly compounding has an effective rate of 0.123. The nominal rate is:

Solutions

Expert Solution

EAR =(1+Nominal Rate/52)^52-1
0.123 =(1+Nominal Rate/52)^52-1
Nominal Rate =((1+0.123)^(1/52)-1)*52 =11.61% or 0.1161


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