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5.6b Bank 1 lends funds at a nominal rate of 9% with payments to be made...

5.6b

Bank 1 lends funds at a nominal rate of 9% with payments to be made semiannually. Bank 2 requires payments to be made quarterly. If Bank 2 would like to charge the same effective annual rate as Bank 1, what nominal interest rate will they charge their customers? Do not round intermediate calculations. Round your answer to three decimal places.

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Answer #1

EAR = (1+APR:n)^n-1 n is number of compounding per year Bank 1 EAR 9.2025% =(1+9%/2)^2-1

APR = [(1+EAR)^(1:n)-1]xn n is number of compounding per year Bank 2 annual rate 8.901% =((1+9.2025%)^(1/4)-1)*4

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