Find the effective rate of return which is equivalent to a stated rate of 8% compounded quarterly. [Use $(1.02)^4=1.0824)$'
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : 8.24%
Here r = 8% p.a, p = 4 quarters
So, effective rate (per rupee) = $(1+\frac{8}{100})^4-1$
$= (1.02)^4-1$
$=1.0824-1= 0.0824$
Hence, the effective rate $=0.0824×100$%
= 8.24%