pacmandefense

ext Wrote:
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> It depends how they provide the rate of return.
>
> If they give the periodic rate say 10% compounded
> semi annually, then u need to convert it to EAR if
> using N yearly periods:
>
> EAR = (1+periodic)^(m) ] - 1
>
> periodic = stated rate / m
>
> so in this example...10% compounded semiannually
> is the stated rate:
>
> EAR = ((1 + (.10/2))^(2)) - 1 = 10.25% annual rate
> = use that rate with N = annual periods.
>
> both approaches do yield the same result as long
> as the I and the N match in units (ie: both
> monthly) but I would say it is better to convert
> the stated rate to an annual rate for many
> questions.


If both of them yield the same result then why clause?