## Related questions with answers

Question

What nominal interest rate per year is equivalent to 11.5% per year, compounded monthly?

Solution

VerifiedAnswered 2 years ago

Answered 2 years ago

Step 1

1 of 2As we can see from interest statement given, compounding period is equal to one month whereas interest period is equal to year. This means compounding frequency is m = 12 over a interest period.

Accordingly, because $\textbf{m}$ is different than 1, or the interest rate period is different than compounding period, we can conclude that interest statement given is stated as nominal interest rate.

11.5% per year is nominal interest rate

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