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CUET · MATHS · PYQ PAPER 2023

The effective rate that is equivalent to a nominal rate of \(12 \%\) compounded quarterly is :

  1. A \(10.55 \%\)
  2. B \(12.55 \%\)
  3. C \(12.25 \%\)
  4. D \(11.55 \%\)
Verified Solution

Answer & Solution

Correct Answer

(B) \(12.55 \%\)

Step-by-step Solution

Detailed explanation

\(r_{eff} = (1 + \frac{r_{nom}}{n})^n - 1\) \(r_{eff} = (1 + \frac{0.12}{4})^4 - 1\) \(r_{eff} = (1.03)^4 - 1\) \(r_{eff} = 1.12550881 - 1\) \(r_{eff} = 0.12550881 \approx 12.55 \\%\)
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