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CUET · MATHS · PYQ PAPER 2025

If \(r_{e f f}=\) effective rate of interest, \(r=\) nominal rate of interest and \(m=\) number of conversion periods per year, the relationship between nominal rate and effective rate of interest is :

  1. A \(r_{e f f}=\left(1-\frac{r}{m}\right)^m-1\)
  2. B \(r_{e f f}=\left(1+\frac{r}{m}\right)^m-1\)
  3. C \(r_{e f f}=\left(1-\frac{1}{r}\right)^m+1\)
  4. D \(r_{e f f}=\left(1+\frac{m}{r}\right)^m-1\)
Verified Solution

Answer & Solution

Correct Answer

(B) \(r_{e f f}=\left(1+\frac{r}{m}\right)^m-1\)

Step-by-step Solution

Detailed explanation

\(r_{e f f}=\left(1+\frac{r}{m}\right)^m-1\)