Question

Determine the nominal rate of interest if the periodic rate is:

a. 1.5% per month. (Round your answer to one decimal place.)

j =  % compounded monthly

b. 1.5% per quarter. (Round your answer to one decimal place.)

j =  % compounded quarterly

c. 1.5% per half-year. (Round your answer to one decimal place.)

j =  % compounded semiannually

Answer 1

Nominal rate of interest is the Annualized percentage rate.

Nominal rate of interest = periodic interest rate*no. of periods per year.

a. Periodic interest rate = 1.5% per month

Nominal rate of interest = 1.5*12 = 18% per annum.

b. Periodic interest rate = 1.5% per quarter

Nominal rate of interest = 1.5*4 = 6% per annum.

c. Periodic interest rate = 1.5% per half year

Nominal rate of interest = 1.5*2 = 3% per annum.

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