On the first of the year, James invested x dollars at Proudstar bank in an account that yields 3% in interest every quarter year. At the end of the year, during which he made no additional deposits or withdrawals, he had y dollars in the account. If James had invested the same amount in an account which pays interest on a yearly basis, what must the interest rate be for James to have y dollars at the end of the year?
Select the correct option:
A) 22.04%  B) 16.12%  C) 12.5%  D) 18.25%  E) 10%
Per quarter, interest = 3% So for a year, interest = 12% Due to quarter cumulation, effective yield (YTM) would be slight higher than 12% Answer = 12.5% =ANSWER:12.5%
<result>C</result>
On the first of the year, James invested x dollars at Proudstar bank in an account that yields 3% in interest every quarter year. At the end of the year, during which he made no additional deposits or withdrawals, he had y dollars in the account. If James had invested the same amount in an account which pays interest on a yearly basis, what must the interest rate be for James to have y dollars at the end of the year?