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12. Nonannual compounding period The number of compounding periods in one year is called compounding...

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Accounting

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12. Nonannual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 15.40%; however interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate You want to invest $11,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 14% that is compounded bimonthly every two months). What is the effective rate of return that you will earn from this investment? O 14.721% O 14.928% O 14.843% O 15.157%

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