a. Convert 3% simple monthly rate into simple annual rate.
b. Convert 6% simple annual rate into annual rate, compounded monthly.
c. Convert 9% annual rate compounded monthly into annual rate, compounded daily.
d. Convert 12% annual rate, compounded weekly into simple annual rate.
e. Convert 15% simple annual rate into annual rate, compounded semi-annually.
Show all work. Label and clearly explain your answer.
As per rules I am answering the first 4 subparts of the question
a: Simple annual rate= Simple monthly rate*12 = 3%*12 = 36%
b: Annual rate compounded monthly = (1+r/m)^m-1
where r is the nominal rate and m is the frequency of compounding
First find the effective rate of 9% compounded monthly as (1+9%/12)^12-1=0.093807
Find the rate which when compounded daily gives the same effective rate
Daily compounded rate=r
(1+r)^(365)-1 = Effective rate
Daily compounded rate= 0.000245685*365= 8.97%
d: Annual rate= (1+r/m)^m-1
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