Answer:
4.07%
Step-by-step explanation:
To obtain the effective rate :
We use :
(1 + r/m)^m - 1
r = rate = 4% = 0.04
m = number of compounding times per year = 12
Effeective rate :
(1 + 0.04/12)^12 - 1
1.0407415 - 1
Effective rate = 0.0407415
0.0407415 * 100%
= 4.07%
