Your bank account pays nominal rate of interest

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Your bank account pays an 8% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT?

a. The periodic rate of interest is 4% and the effective rate of interest is less than 8%.

b. The periodic rate of interest is 2% and the effective rate of interest is 4%.

c. The periodic rate of interest is 2% and the effective rate of interest is greater than 8%.

d. The periodic rate of interest is 8% and the effective rate of interest is also 8%.

e. The periodic rate of interest is 8% and the effective rate of interest is greater than 8%.

Reference no: EM131323896

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