SOA Exam FM Sample Question 186
Study guide: Exam FM-2
A corporation makes a payment at the end of each month into a savings account that offers an annual nominal interest rate of 8% compounded quarterly.
Determine the equivalent effective rate of interest per payment period.
- A)
\left(1+\dfrac{8\%}{4}\right)^{1/3}-1 - B)
\left(1+\dfrac{8\%}{12}\right)-1 - C)
\left(1+\dfrac{8\%}{12}\right)^{3}-1 - D)
\left(1+\dfrac{8\%}{12}\right)^{12}-1 - E)
\left(1+\dfrac{8\%}{4}\right)^{4}-1
Answer this question and see the worked solution