Question

If the interest on a sum is compounded quarterly, which of the following is necessarily true? a) The effective rate of interest is same for every year. b) The ratio of interest for the (m + 1) th year to m th year will be same as the ratio of interest for the (n + 1) th year to n th year. c) Both (a) and (b) d) Can’t say

Answer 1

always multiply by (1 +r/4) each period so the same ratio every year (1+r/4)^4
so both I think

Answer 2

3