mina We would the erteenve annoal interest rate be the amme nerest rate? When mrerest is compounded s. Daity Quarterty d Annually
Expert Answer
d. Annually
Effective interest rate (re) is the annual interest rate that gives same returns, which a nominal interest rate (rn) gives when compounded n times per period. Therefore, when n =1, then effective interest rate is equal to nominal interest rate. i.e. re = rn. n=1 means annual compounding.