Find the nominal rate of interest compounded monthly, equivalent to an effective rate of 42.95% per annum.

• 0.3627
• 0.381
• 0.395
• 0.4
• 0.4127

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

Solution: A

[[math]] (1+i)=\left(1+i^{(12)} / 12\right)^{12}[[/math]]

so

[[math]]i^{(12)}=12\left[(1+i)^{1 / 12}-1\right]=12\left[(1.4295)^{1 / 12}-1\right]=.3627 [[/math]]

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.