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The statement reads:

"If interest in an account is compounded quarterly, then the effective rate of the account will be greater than the nominal rate of the account."

This statement is **True**.

When interest is compounded more than once a year (such as quarterly), the effective annual rate (EAR) or effective rate takes into account the frequency of compounding, and it is higher than the nominal rate (the stated annual interest rate). The nominal rate does not account for compounding, whereas the effective rate does, leading to a higher value when compounded multiple times in a year.

Would you like more details on the relationship between nominal and effective interest rates?

### Related Questions:
1. What is the formula to calculate the effective annual rate (EAR)?
2. How does the number of compounding periods per year affect the effective rate?
3. Can you explain the difference between nominal and effective interest rates?
4. What happens to the effective rate if compounding is done monthly instead of quarterly?
5. How can we convert a nominal interest rate to an effective rate?

**Tip:** The more frequent the compounding, the higher the effective interest rate will be compared to the nominal rate.

If interest in an account is compounded quarterly, then the effective rate of the account will be greater than the nominal rate of the account.

Learn how to differentiate between the effective annual rate (EAR) and the nominal interest rate in accounts with quarterly compounding. Understand how compounding frequency increases the effective rate compared to the nominal rate. This topic is relevant for advanced high school or college-level students studying financial mathematics.

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