The correct statement is that Joel's effective will be greater than 0.25 percentage points. So, the correct option for the statement is not given in the options above.
Nominal rate of interest can be calculated by the way of using the given information into the derived formula and comparing with such effective rate of interest.
- It has been given that the nominal rate of interest is 11.85% which can also be written as 0.1185. So putting the values in the following formula by assuming that the loan was taken for one year.
- [tex]\rm Effective\ Rate\ of\ Interest= (1+ \dfrac{i}{m})^r^n-1\\\\\\\rm Effective\ Rate\ of\ Interest= (1+ \dfrac{0.1185}{52})^0.1185^ x\ ^1-1\\\\\\\\\rm Effective\ Rate\ of\ Interest= (1+0.0022)^5^2[/tex]
- Calculating further we get,
- [tex]\rm Effective\ Rate\ of\ Interest= 1.1210596389784-1\\\\\\\rm Effective\ Rate\ of\ Interest=0.121[/tex]
- Now comparing the nominal rate with the effective rate of interest we can conclude that the difference is greater than by 0.25 percentage points.
Hence, the correct option is that the effective rate for Joel is greater by 0.25 percentage points and no option in the statements quoted above is correct.
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https://brainly.com/question/4626564
