Question
convert an effective anual interest rate 8% compounded annually to a nominal interest rate of 11.5% p.a compounded monthly correct to one decimal place
Answers
Reiny
11.5% p.a compounded monthly
let that annual rate be i
1 + i = (1 + .115/12)^12
1 + i = 1.121259...
i = appr .1213 or 12.13%
So the first rate is 8% per annum compounded annually, the other is 12.13% per annum compounded annually.
You cannot convert one to the other.
That's like saying: make 5 equal to 9
let that annual rate be i
1 + i = (1 + .115/12)^12
1 + i = 1.121259...
i = appr .1213 or 12.13%
So the first rate is 8% per annum compounded annually, the other is 12.13% per annum compounded annually.
You cannot convert one to the other.
That's like saying: make 5 equal to 9