Calculating interest rates
Extending this example to the case of quarterly compounding with a nominal interest rate of 6 percent we first calculate the interest rate per period, r, and the number of compounding periods in a year, n: i = 0.06 / 4 = 0.015 per quarter, and n = 12 months / 3 months = 4 quarters in a year. The EAR is: ................
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