The effective annual rate of interest for 12% per annum compounded quarterly is: MCQ with Answer and Explanation

Question

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The effective annual rate of interest for 12% per annum compounded quarterly is:

A. 12.60%

B. 12.55%

C. 12.65%

D. 12.50%

Answer: Option B

Solution (By JKSSB Mock Tests)

Quarterly rate = 3%, (1.03)⁴ = 1.12550881, effective ≈ 12.55%.

This question belongs to: Maths Compound Interest

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Practice More Compound Interest Questions

Question #1

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A sum of money placed at compound interest triples itself in 5 years. In how many years will it become 9 times of itself?

A. 12 years

B. 15 years

C. 8 years

D. 10 years

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Correct Answer: Option D

Explanation:
The sum becomes 3^1 times in 5 years. It will become 9 (3^2) times in 2 * 5 = 10 years.

This question belongs to: Maths Compound Interest

Question #2

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If the compound interest on a certain sum for 2 years at 12% per annum is Rs. 1590, find the simple interest on the same sum at the same rate for the same period.

A. Rs. 1450

B. Rs. 1400

C. Rs. 1550

D. Rs. 1500

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Correct Answer: Option D

Explanation:
Effective compound interest rate = 12 + 12 + (1212)/100 = 25.44%. Simple interest rate = 12 * 2 = 24%. Given 25.44% of sum = 1590 => Sum = 1590 / 0.2544 = Rs. 6250. Simple Interest = 24% of 6250 = Rs. 1500.

This question belongs to: Maths Compound Interest