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Find the EAR

Find the EAR

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Saved Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate Number of Times Effective Rate (APR) Compounded (EAR) 8.2 % Quarterly 17.2 Monthly 13.2 Daily 10.2 Infinite
Transcribed Image Text:Saved Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate Number of Times Effective Rate (APR) Compounded (EAR) 8.2 % Quarterly 17.2 Monthly 13.2 Daily 10.2 Infinite
Expert Solution
Step 1

  Effective annual rate (EAR) is the real return on an investment. It is also called effective interest rate. It is the rate of interest to be paid for an investment.

 It can be calculated using the following equation:

Effective annual interest rate =1+inn-1

Where,

i  = Interest rate

n = Number of compounding period

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