13.1
1. You get two credit card offers in the mail: one offers you a rate of 10%, compounded monthly and the other offers 10.1% compounded semi-annually. Which is the lower effective rate? (4 pts)
Usine m as the compounding rate, effrate=(1+r/m)^(m) - 1, so effrate1=(1+.10/12)^(12) - 1=
.1047
effrate2=(1+.101/2)^(2) - 1=.1036
Thus, the second card has the lower effective rate.