Your Bank Account Pays a 6% Nominal Rate of Interest

question 102

Multiple Choice

Your bank account pays a 6% nominal rate of interest.The interest is compounded quarterly.Which of the following statements is CORRECT?

• A) The periodic rate of interest is 1.5% and the effective rate of interest is 3%.
• B) The periodic rate of interest is 6% and the effective rate of interest is greater than 6%.
• C) The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%.
• D) The periodic rate of interest is 3% and the effective rate of interest is 6%.
• E) The periodic rate of interest is 6% and the effective rate of interest is also 6%.

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