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Find the effective annual rate of 4 per cent per annum compound interest paid quarterly.?

4.0604%
4.604%
5.0605%
5.605%

Correct Answer: 4.0604%

Explanation:

Effective annual rate = 100(1 + {(4/4) /100})⁴ - 100
= (101/100)⁴ x 100 - 100
= 104.0604 - 100
= 4.0604%

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