Answer:
Nominal rate is 4.4%
Periodic rate is 1.1%
Effective rate is 4.5%
Explanation:
Bank offer the the nominal interest rate to their customer which already includes the inflation effect, so the stated rate is the nominal rate on the investment.
Nominal Interest rate = 4.4%
Interest rate that is calculated for a specific period from an annual rate is periodic interest rate.
Periodic interest rate (Quarterly) = 4.4% x 3 /12 = 1.1%
Effective Interest rate is the actual rate of return that an investor receives including compounding effect. It is expressed in annual term.
Effective Interest rate = ( 1 + 1.1% )^4 - 1 = 4.5%
