# Nominal Rate

• Jul 11th 2010, 12:38 AM
petedam
Nominal Rate
Here the question that i hope to get some help on...

After 10½ years of contributions of \$2,000 at the end of every six (6) months to an RRSP, the accumulated amount stood at \$65,727.82. What semi-annually compounded nominal rate and equivalent compounded monthly rate of return were earned by the funds in the RRSP?

Using my calculator I got this far...
0 PV
21 N
-2,000 PMT
65,727.82 FV
COMP
I
4.2507

4.2507 would be the periodic monthly rate, correct?

thanks,
• Jul 11th 2010, 02:38 AM
SpringFan25

I is probably the "equivalent monthly compunded rate". You need to convert it to a semi-annual nominal rate using standard methods.
• Jul 12th 2010, 07:25 PM
petedam
• Periodic is 4.251
• semi annaully compound nominal would be 4.25 x 2 = 8.502
• equivalent compounded monthly rate is 0.6689%

Am i in the ball park?

Thanks,
• Jul 16th 2010, 04:10 AM
petedam
Anyone?

Thanks!
• Jul 16th 2010, 07:31 AM
Wilmer
Quote:

Originally Posted by petedam
• Periodic is 4.251
• semi annaully compound nominal would be 4.25 x 2 = 8.502
• equivalent compounded monthly rate is 0.6689%

Am i in the ball park?

No.
m = monthly cpd. rate:
(1 + m)^12 = 1.08502
1 + m = 1.08502^(1/12)
m = .006823.... or .6823%
• Jul 17th 2010, 09:19 AM
petedam
Quote:

Originally Posted by Wilmer
No.
m = monthly cpd. rate:
(1 + m)^12 = 1.08502
1 + m = 1.08502^(1/12)
m = .006823.... or .6823%

Thanks...I re- did and got 0.6823...not sure what happened the first time.
• Jul 23rd 2010, 03:30 AM
SpringFan25
is that a spambot? i cant quite tell
• Jul 23rd 2010, 04:11 AM
Wilmer
Quote:

Originally Posted by springfan25
is that a spambot? I cant quite tell

what?!
• Jul 23rd 2010, 05:15 AM
SpringFan25
the post i was referring to has been deleted. I wasn't referring to your answer or any other post that is still in the thread ;)