Find the Effective Rate of Interest Corresponding to a Nominal

question 203

Multiple Choice

Find the effective rate of interest corresponding to a nominal rate of 6%/year compounded annually, semiannually, quarterly, and monthly. ​

• A) The effective rate of interest corresponding to a nominal rate of 6%/year is
• 6)00% if compounded annually,
• 6)04% if compounded semi-annually,
• 6)59% if compounded quarterly,
• 5)00% if compounded monthly.
• ​
• B) The effective rate of interest corresponding to a nominal rate of 6%/year is
• 6)00% if compounded annually,
• 6)59% if compounded semi-annually,
• 5)00% if compounded quarterly,
• 6)17% if compounded monthly.
• ​
• C) The effective rate of interest corresponding to a nominal rate of 6%/year is
• 6)00% if compounded annually,
• 6)09% if compounded semi-annually,
• 6)14% if compounded quarterly,
• 6)17% if compounded monthly.
• ​

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Definitions:

Randomized Block Design

An experimental design in which units are blocked into groups sharing similar characteristics to reduce variability, with each block then randomly assigned to treatments.

Independent Samples Design

An experimental design where separate groups are independently assigned to different treatments, with no member belonging to more than one group.

Completely Randomized Design

An experimental design where subjects are randomly assigned to treatments, ensuring that each treatment occurs with equal probability across all subjects.

Homogeneous Units

Groups or samples that are similar in characteristics or properties, ensuring that comparisons or experiments are not influenced by differing variables.