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CUET · MATHS · PYQ PAPER 2025

The effective rate of return equivalent to a nominal rate of 12% per annum compounded quarterly is:
[Given that \((1.03)^4=1.1255\) ]

  1. A 13.55%
  2. B 12.55%
  3. C 11.55%
  4. D 14.25%
Verified Solution

Answer & Solution

Correct Answer

(B) 12.55%

Step-by-step Solution

Detailed explanation

\( EAR = (1 + \frac{0.12}{4})^4 - 1 \) \( EAR = (1 + 0.03)^4 - 1 \) \( EAR = (1.03)^4 - 1 \) \( EAR = 1.1255 - 1 \) \( EAR = 0.1255 \) \( EAR = 12.55\% \)
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