The PC Financial Is Considering Changing the Method of Compounding

question 11

Multiple Choice

The PC financial is considering changing the method of compounding interest on line of credit accounts to daily compounding. If the current rate is 5.75% compounded quarterly, what nominal rate should PC Financial propose to maintain the same effective rate of interest?

• A) 0.576%
• B) 0.016%
• C) 1.6%
• D) 5.719%
• E) 4.61%