Question: Determine equivalent rates to above based on quarterly compounding (3 decimals). Period Rate (i) ________ ________ ________ ________ Notional Annual Rate (j) ________ ________ ________

  1. Determine equivalent rates to above based on quarterly compounding (3 decimals).

Period Rate (i) ________ ________ ________ ________

Notional Annual Rate (j) ________ ________ ________ ________

Effective Annual Rate (should equal above) ________ ________ ________ ________

  1. In terms of Effective Annual Rate:
    1. What is the EAR of a notional rate of 10% compounded annual ly?

  1. How can EAR be used to provide valuable information?

  1. Why should EARs calculated for each scenario in question 1 equal the EARs in question 2?

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