How much should a monthly compounded account with an EAR of 10% earn semi-annually?
A)4.88%
B)5.00%
C)4.76%
D)5.11%

Name: How much should a monthly compounded account with an EAR of 10% earn semi-annually? A)4.88% B)5.00% C)4.76% D)5.11%
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Question

Quizplus · Accepted Answer

To find the semi-annual rate from an EAR of 10%, we use the formula: (1 + EAR)^(1/n) - 1, where n is the number of compounding periods per year. For semi-annual, n = 2. So, (1 + 0.10)^(1/2) - 1 = 0.0488 or 4.88%.

How Much Should a Monthly Compounded Account with an EAR