Question

If the nominal annual interest rate is 12% compounded quarterly, what is the effective annual interest rate?

Answer 1

$𝑖=(1+𝑟/𝑚)^m-1$

$𝑖=(1+0.12/4)^4-1$

$i=0.125509$

$I=i\times100$

$I=12.5509\%$