Find the effective rate of interest.
-$6 \frac { 1 } { 4 } \%$ % compounded monthly
A) 6.43%
B) 6.25%
C) 6.39%
D) 6.29%

Question

Quizplus · Accepted Answer

The effective rate of interest can be calculated using the formula $ (1 + \frac{r}{n})^n - 1 $, where $r$ is the annual nominal rate (as a decimal) and $n$ is the number of compounding periods per year. For $6 \frac{1}{4}\% = 6.25\%$, or $0.0625$ as a decimal, compounded monthly ($n = 12$), the calculation is $ (1 + \frac{0.0625}{12})^{12} - 1 $, which equals approximately $0.0643$ or $6.43\%$.

Find the Effective Rate of Interest 614%6 \frac { 1 } { 4 } \%641​%

Find the Effective Rate of Interest $6 \frac { 1 } { 4 } \%$