Practice prompt · Q:time-value-of-money-and-financial-mathematics/periodic-rate-001

Match monthly rate and period units

Formative conversion item that diagnoses annual rate and monthly period mismatches.

Updated Aug 7, 2026 Review due Nov 7, 2026
Practice

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A 6% stated annual rate compounds monthly for three years. Which input pair uses matching units under the declared nominal-rate convention?

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Answer: B

Choice B is correct: 0.06/12 = 0.005 per month and 3×12 = 36 months.