If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?

Name: If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?
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Question

Quizplus · Accepted Answer

The effective annual rate (EAR) can be calculated using the formula: EAR = (1 + i/n)^(n*t) - 1, where i is the nominal rate (0.08), n is the number of compounding periods per year (4), and t is the number of years (1). EAR = (1 + 0.08/4)^(4*1) - 1 = 0.0824 or 8.24%.

If the Annual Rate Is 8%, and the Interest Is