Your investment advisor informs you that you do not need to pay a service fee fo

Question

Your investment advisor informs you that you do not need to pay a service fee for his services rendered. Instead he invests your money for a month and keeps the proceeds before investing it on your behalf. If your advisor makes and keeps a 2% return on your investment, what is his EAR if the earnings rate could be extrapolated for one year? Please show formula and work. Thanks I tried on my own but can't figure it out. Here's what I did but it isn't one of the choices. EAR=[(1+0.02/12)^12}-1=0.02018

Please do not copy someones question answer on this site and please dont submit the formula i do know it just cant figure it out

Explanation / Answer

EAR = (1+i)^12 - 1

EAR = 1.02^12 - 1

EAR = 26.82%

you have taken .02/12 but it should be .02 only becoz 2% is given as monthly already

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