A bank quotes a stated annual interest rate of 4.00%. If that rate is equal to an effective annual rate of 4.08%, then the bank is compounding interest:
A daily. B quarterly. C semiannually
the formula is:
EAR = (1 + Periodic interest rate)m – 1
what is Periodic Interest Rate?
m would be by tentative 1 by each, right? so 365, 4, 2
Also how can I elevate a number in HP12c, can someone do a step by step?
Thank you.
This formula could be consulted in the test somewhere or I need to know?
The periodic interest rate is the nominal (annual) rate divided by the number of compounding periods per year: m; it’s the effective rate for one compounding period.
I’m not sure why your exponent is m − 1; it should be m.
I’m not sure what you mean by “tentative 1 by each”. Certainly, m would be 365, 4, and 2, respectively.
If by “elevate” you mean raise to a power, you use the yx button. For example, to calculate 1.022, you would:
You’re welcome.
You need to know it.
Hey, thanks a lot mate!
EAR = (1 + Periodic interest rate)m
EAR = (1 + 0,04/365)365
EAR = (1,00010959)365
EAR = 1,0408
Thanks for explaining how the raise works too, thats what I was in the need to know!