Final answer:
The quarterly rate from an APR of 4.8% with quarterly compounding is 1.2%, and the effective annual rate (EAR) is approximately 4.8864%.
Step-by-step explanation:
The student's question involves calculating the quarterly interest rate from an annual percentage rate (APR) with quarterly compounding, as well as determining the effective annual rate (EAR) for the same interest scenario.
quarterly rate
The quarterly rate is found by dividing the annual rate by the number of quarters in a year. Therefore, the quarterly rate for a 4.8% APR is 1.2% (which is 4.8% divided by 4).
EFFECTIVE ANNUAL RATE (EAR),
To calculate the EFFECTIVE ANNUAL RATE (EAR), use the formula EAR = (1 + quaterly_rate)^(number_of_periods) - 1. For a quarterly rate of 1.2%, the EAR would be (1 + 0.012)^(4) - 1, which calculates to approximately 4.8864%.