Question

Bank One offered a 10-year certificate of deposit (CD) at 4.8% interest compounded quarterly. On the same day on the Internet, First Bank offered a 10-year CD at 4.79% compounded monthly. Find the APY for each CD. Which bank paid a higher APY? The APY for the CD at Bank One is % (Type an integer or decimal rounded to three decimal places as needed.) The APY for the CD at First Bank is % (Type an integer or decimal rounded to three decimal places as needed.) Which bank paid a higher APY? tents O A Bank One OB. First Bank access a Librar

Answer 1

Formula to calculate APY
APY	(1+(r/n))^n-1
r is the interest rate and n is number of compounding
Calculation of APY for CD at bank one
APY	((1+(4.8%/4))^4)-1
APY	((1+0.012)^4)-1
APY	4.887%
Calculation of APY for CD at first bank
APY	((1+(4.79%/12))^12)-1
APY	(1.003992^12)-1
APY	4.897%
Thus, First bank has higher APY