PWC Recently Proposed to BMO to Change the Method of Compounding

question 62

Multiple Choice

PWC recently proposed to BMO to change the method of compounding interest on line of credit accounts to monthly compounding, as part of the marketing campaign. If the current rate is 2.5% compounded quarterly, what nominal rate should the PWC suggest to BMO executives to maintain the same effective rate of interest?

• A) 0.208%
• B) 2.495%
• C) 3.773%
• D) 2.5%
• E) 2.75%

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