Find the effective rate of interest per annum equivalent to the nominal interest rate of 11% compounded monthly.
10.48%
0.92%
11%
11.46%
11.57%
To find the effective rate of interest per annum equivalent to the nominal interest rate of 11% compounded monthly, we can use the formula:
Effective annual rate = (1 + (nominal rate/n)) ^ n - 1
where n is the number of compounding periods per year. In this case, n is 12 because the interest is compounded monthly.
Plugging in the values:
Effective annual rate = (1 + (0.11/12)) ^ 12 - 1
Effective annual rate = (1 + 0.00916667) ^ 12 - 1
Effective annual rate = (1.00916667) ^ 12 - 1
Effective annual rate = 1.1146 - 1
Effective annual rate = 0.1146 or 11.46%
Therefore, the effective rate of interest per annum equivalent to the nominal interest rate of 11% compounded monthly is 11.46%. The closest option is 11.46%.