# Premier Federal Credit Union is offering a 2-year certificate of deposit with a stated rate of 6.50% and quarterly compounding, The effective rate for the certificate is: A. 6.6879%. B. 6.6602%. C. 6.6056%.

Premier Federal Credit Union is offering a 2-year certificate of deposit with a stated rate of 6.50% and quarterly compounding, The effective rate for the certificate is:
A. 6.6879%.
B. 6.6602%.
C. 6.6056%.
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Genesis Rosario
The formula to find the effective rate is-
Effective rate $=\left(1+\frac{i}{n}{\right)}^{n}$
Effective rate $=\left(1+\frac{0.0650}{4}{\right)}^{4}$ (4 as quaterly compounding)
Effective rate $=\left(1+0.01625{\right)}^{4}$
Effective rate (Option B)