Which of the following compounding rates is equivalent to an effective interest rate of 2.75% p.a. Select one: O a. 2.6% p.a. compounding monthly O b. 2.6% p.a. compounding daily O c. 2.7% p.a. compounding six-monthly O d. 2.75% p.a. compounding yearly 13
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- Find the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 8% . 144.20% 1.94% 36.05% 7.77% b. Nominal interest rate compounded monthly that is equivalent to 3.5% compounded quarterly. 31.78% 2.65% 3.49% 0.29% c. Nominal interest rate compounded monthly that is equivalent to 6% compounded annually. 5.84% 1,214.64% 0.49% 101.22%Compare the annual percentage yield (APY) of loan A, with nominal interest rate 10% and quarterly compounding to loan B, which has nominal interest rate 12% and daily compounding. Round answers to one decimal place. APY Loan A: APY Loan B: I %Find the effective rate of interest corresponding to a nominal rate of 5.5% compounded seminannually. Answer choices: 5.645% 5.91% 5.558% 5.569%
- Define each of the following loan terms, and explain how they are related to one another: the prime rate, the rate on commercial paper, the simple interest rate on a bank loan calling for interest to be paid monthly, and the rate on an installment loan based on add-on interest. If the stated rate on each of these loans was 5%, would they all have equal, effective annual rates? Explain.Calculate the effective interest rate per month for an interest rate of 14% in continuously compounded account? a. 1.488% b. 1.258% c. 1.671% d. 1.174%What is the annual percentage rate on a loan with a stated rate of 2 percent per quarter? A. 2.00 percent B. 2.71 percent C. 4.04 percent D. 8.00 percent E. 8.24 percent
- Subparts A-C are completed, please only complete D - G. Previous subpart answers: A. $ 851.68 B. $147,797 C. 7.50% Assume the following for a one-year adjustable rate mortgage loan that is tied to the one-year Treasury rate: Loan amount: Annual rate cap: Life-of-loan cap: Margin: First-year contract rate: One-year Treasury rate at end of year 1: One-year Treasury rate at end of year 2: Loan term in years: Required: Given these assumptions, calculate the following: a. Initial monthly payment. b. Loan balance end of year 1. $ 150,000 2% 5% 2.75% 5.50% 5.25% 5.50% 30 c. Year 2 contract rate, assuming the annual cap applies to the teaser rate. d. Year 2 monthly payment. e. Loan balance end of year 2. f. Year 3 contract rate, assuming the annual cap applies to the teaser rate. g. Year 3 payment.Find the effective rate of annual interest 9% that paid quaterly. a. 9.5% b. 9.3% c. 9.10% d. 9.0%Compute for the Effective Interest Rate Payment Period = Quarter 1. 10% Compounded Yearly = Blank 1 2. 10% Compounded Semi-annually = Blank 2 3. 10% Compounded Quarterly = Blank 3 4. 10% Compounded Bi-monthly Blank 4 5. 10% Compounded Monthly Blank 5 6. 10% Compounded Continuously Blank 6
- Compounding frequency, time value, and effective annual rates For each of the cases in the following table, а. Calculate the future value at the end of the specified deposit period. b. EAR. Determine the effective annual rate, С. Compare the nominal annual rate, r, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effective annual rates? Case Initial Nom annual rate Comp.frq. Deposit Period A $2,700 7% 25 B $50,000 12% 4 3 C $1,100 7% 1 11 D $20,000 17% 4 8What nominal rate of interest compounded semi-annually can be used instead of 10 % comp. monthly a.) 8.89 % b.) 11.08 % c.) 9.83 % d.) 10.21%Calculate and compare the effective rates of interest for saving accounts paying: (a.) a nominal rate of 3.65%; compounded quarterly (b.) a nominal rate of 3.5%; compounded monthly