Final answer:
The effective annual rate for an APR of 11.70 percent compounded quarterly is approximately 12.08 percent.
Step-by-step explanation:
The effective annual rate can be calculated using the formula:
EAR = (1 + (APR / n))^n - 1
Where:
- APR is the annual percentage rate
- n is the number of compounding periods per year
In this case, the APR is 11.70 percent and the compounding is done quarterly, so there are 4 compounding periods per year. Plugging these values into the formula, we get:
EAR = (1 + (11.70 / 4))^4 - 1
Calculating this expression, we find that the effective annual rate is approximately 12.08 percent (rounded to two decimal places).