Question

Which of the following APRs compounded monthly is equivalent to an APR of 14.15% compounded quarterly using 360-day calendar years, 30-day months, and 3-month quarters?

a) 12.960%

b) 13.320%

c) 13.680%

d) 14.040%

e) 14.400%

Answer 1

Here,

Nominal Rate ( n ) = 14.15% = 0.1415

Compounding Period ( m) =  4

Now Annual Percentage Rate APR,

Now in Scenario 02 :

Here APR will be APR = 0.149187

Compounding Period ( m) = 12

We have to find Nominal Rate (n)

Now Annual Percentage Rate APR,

n = 0.1398 = 13.98%

So Equivalent Nominal Rate will be 13.98%

Answer from the given choice 14.04% (Nearest Value) ( Option d)

Attached Excel Screenshot and formula for conversio