Effective Rate and Nominal Rate (compound interest)

[meck]

1) What is the effective rate if the nominal rate is 8.25% and the interest is compounded annually, quarterly, monthly, continously?

2) What is the nominal rate if the effective rate is 6.25% and the interest is compunded annually, quarterly, monthly, continously?

So far I do not know where to start because I have a feeling that A) I'm missing some additional information to do the problems or B) I am not aware of a really handy equation that would solve my problems.

I know about P=Po(1+R/N)^(N)(T) but I only know how to use it when I am given all the variables.

Thanks for all your help in advanced.

 

[meck]

I think I've found something but not sure if it's right.

Nominal Rate - P=Po(1.0625)^(1), P=Po(1.0625)^(4), P=Po(1.0625)^(12), continously 1.0625 = e^r.

I still don't know about the other way (finding effective rate).

 

[Denis]

1) What is the effective rate if the nominal rate is 8.25% and the interest is compounded annually, quarterly, monthly, continously?

I know about P=Po(1+R/N)^(N)(T) but I only know how to use it when I am given all the variables.

You ARE given all the variables :shock:
Let's take one of your cases:
What is the effective rate if the nominal rate is 8.25% and the interest is compounded quarterly?

Po = $1
R = .0825
N = 4
T = 1

ER = 1(1 + .0825/4)^(4*1) - 1
ER = (1.020625)^4 - 1
ER = 1.0850876... - 1
ER = .0850876...

So Effective Rate = approximately 8.5%

 

[meck]

haha i totally see what i was missing now, thanks a lot.