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%.

Krish Crosby 2022-09-14 Answered
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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Answers (1)

Genesis Rosario
Answered 2022-09-15 Author has 8 answers
The formula to find the effective rate is-
Effective rate = ( 1 + i n ) n
Effective rate = ( 1 + 0.0650 4 ) 4 (4 as quaterly compounding)
Effective rate = ( 1 + 0.01625 ) 4
Effective rate = 0.066602  or  6.6602(Option B)
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