What is the quarterly compounded nominal rate that is equivalent to 18% compounded monthly?
A) 18.53%
B) 17.84%
C) 16.89%
D) 18.64%
E) 18.27%

Question

Quizplus · Accepted Answer

To find the equivalent quarterly compounded nominal rate, first convert the monthly compounded rate to an effective annual rate, then convert that to a quarterly compounded nominal rate. The effective annual rate for 18% compounded monthly is approximately 19.56%. The equivalent nominal rate compounded quarterly is approximately 18.27%.

What Is the Quarterly Compounded Nominal Rate That Is Equivalent