Answer:
Effective annual yield = 0.05094534 or 5.094%
Step-by-step explanation:
Given:
Rate of interest (r) = 5% = 0.05
Interest = compounded quarterly
Find:
Effective annual yield = Y
Computation:
[tex]Y=(1+\frac{r}{n} )^n-1\\\\Y=(1+\frac{0.05}{4} )^4-1\\\\Y=(1+0.0125 )^4-1\\\\Y=(1.0125 )^4-1\\\\ Y=1.05094534-1\\\\Y=0.05094534\\\\\\[/tex]
Effective annual yield = 0.05094534 or 5.094%
