Monthly Compounder - Quant Trader Interview Question
Difficulty: Medium
Category: Mental Math & Estimation
Practice quant interview questions from top firms including Jane Street, Citadel, Two Sigma, DE Shaw, and other leading quantitative finance companies.
Topics: mental-math, estimation, compound-interest, finance
Problem Description
You are evaluating a bond that has a nominal annual interest rate of 12%, compounded monthly. Estimate the effective annual rate (EAR) of this bond. The EAR represents the actual rate of return earned after considering the effect of compounding.
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