Here's the problem:

What nominal rate compounded monthly has the same Annual Percentage Yield as 7% compounded quarterly?

How would I go about solving this?

Results 1 to 2 of 2

- Oct 8th 2009, 04:48 PM #1

- Joined
- Oct 2009
- Posts
- 1

- Oct 8th 2009, 06:10 PM #2

- Joined
- Aug 2007
- From
- USA
- Posts
- 3,111
- Thanks
- 2

i = Annual Nominal Rate to be compounded monthly

The description of 7% is inadequate. Is that 7% quarterly or 7% Nominal Annual to be compounded quarterly? Let's go with the latter and we are nearly done.

j = i/12 = Monthly interest rate

k = 0.07/4 = Quarterly interest rate for 7%

Solve for j

Solve for i.