If the effective equivalent annual interest rate is 16.2%, and interest is compounded daily, what is the corresponding nominal annual interest rate?
A)11%
B)13%
C)15%
D)17%
E)19%

Question

Quizplus · Accepted Answer

The nominal annual interest rate can be calculated using the formula for the effective annual rate (EAR) with daily compounding: EAR = (1 + nominal rate/365)^365 - 1. Solving for the nominal rate when EAR is 16.2% gives approximately 15%.

If the Effective Equivalent Annual Interest Rate Is 16