365,842 views
24 votes
24 votes
An account has a rate of 1.9%. Find the effective annual yield if the interest is compounded quarterly.

User Yuriy Romanenko
by
3.3k points

1 Answer

17 votes
17 votes

Answer:

1.914 %

Explanation:

Compounded quarterly means 4 periods per year = n

interest in decimal form per period i = .019/4 = .00475

Formula

annual yield = ( 1+ i)^n -1

(1+ .00475)^4 -1 = .01914 = ~ 1.914%

User KEpEx
by
3.0k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.