An effective rate of 15.5% based on monthly compounding is similar to what nominal rate?

Name: An effective rate of 15.5% based on monthly compounding is similar to what nominal rate?
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Question

Quizplus · Accepted Answer

The effective annual rate (EAR) can be converted to the nominal annual rate (NAR) with monthly compounding by using the formula: EAR = (1 + NAR/12)^12 - 1. Rearranging the formula to solve for NAR gives us: NAR = 12[(1 + EAR)^(1/12) - 1]. Plugging in the EAR of 15.5% (or 0.155) gives us a NAR of approximately 14.50%.

An Effective Rate of 15