The effective annual rate of 5% compounded monthly is approximately 5.12%.

Name: The effective annual rate of 5% compounded monthly is approximately 5.12%.
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The effective annual rate (EAR) can be calculated using the formula EAR = (1 + r/n)^(n) - 1, where r is the annual interest rate and n is the number of compounding periods per year. For a 5% rate compounded monthly, EAR = (1 + 0.05/12)^(12) - 1 ≈ 0.0512 or 5.12%.

The Effective Annual Rate of 5% Compounded Monthly Is Approximately