## [answered] Bank 1 lends funds at a nominal rate of 6% with payments to

Bank 1 lends funds at a nominal rate of 6% with payments to be made semiannually. Bank 2 requires payments to be made quarterly. If Bank 2 would like to charge the same effective annual rate as Bank 1, what nominal annual rate will they charge their customers? Round your answer to three decimal places. Do not round intermediate calculations.

Bank 1: ( Effective annualrate= 1+ 0.06

2 2 ) Bank 2:

x

4 ( ) Effective annualrate= 1+ 4 Since Bank 2 would like to charge the same effective annual rate as Bank 1,

2

4

0.06

x

1+

= 1+

2

4

0.5

0.06...

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This question was answered on: Sep 18, 2020

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