An effective rate of 6.6% (based on quarterly compounding) has a higher nominal rate than an effective rate of 6.5% (based on monthly compounding).

Question

Quizplus · Accepted Answer

The nominal rate for the 6.6% effective rate with quarterly compounding is higher because it requires a higher nominal rate to achieve the same effective rate with fewer compounding periods per year compared to monthly compounding.

An Effective Rate of 6