For each of the following accounts, give the growth factor per compounding period, then give the annual growth factor a...
Which of the following bank accounts has the highest effective annual return? a. An account that pays 8% nominal interest with monthly compounding. b. An account that pays 8% nominal interest with annual compounding. c. An account that pays 7% nominal interest with daily (365-day) compounding. d. An account that pays 7% nominal interest with monthly compounding. e. An account that pays 8% nominal interest with daily (365-day) compounding.
3. Nonannual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows An investor can invest money with a particular bank and earn a stated interest rate of 13.20%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate You want to invest $19,000 and...
If interest is compounded monthly at 8% per year for 10 years, explain how to find the number of compounding periods and the interest rate per compounding period.
21. You are about to deposit $139 into one of the following saving accounts to be left on deposit for 25 years, each bank offers an account with a different interest rate and compounding period. Assuming you want to maximize your wealth, how much money would be in the bank account that offers the best effective rate of return after 25 years? Bank A. 9.5 percent rate compounded semi annually Bank B. 9.4 percent rate compounded monthly Bank C. 9.3...
5. Which of the following bank accounts has the highest effective annual return (EAR)? An account that pays 8% nominal interest with monthly compounding An account that pays 8% nominal interest with annual compounding An account that pays 7% nominal interest with daily (365-day) compounding An account that pays 7% nominal interest with monthly compounding a. b. C. d. 6. Which of the following statements regarding a 30-year monthly payment amortized mortgage with a fixed nominal interest rate of 10%...
If you want to have $87654 in the bank at the end of 10 years and you get a 3% interest rate per year. How much money do you need to deposit each month if a) monthly compounding? b) semi-annual compounding? c) quarterly compounding? d) daily compounding?
What is the annual nominal rate compounded daily for a bond that has an annual yield of 3.9%? The annual nominal rate is %. (Round to three decimal places. Use a 365-day year.)
What is the future value of three years handce of 1,000 invested in an account with a stated annual interest rate of 8 percent?a. Compounded annually?b. Compounded semi-annually?c. Compounded monthly?d. Compounded continuously?e. Why does the future value incread as the compounding period shortens?I need not only the answers but the work as well.
Calculate the EAR given the following: Stated Rate (APR, pct) Compounding Period EAR 6.3 daily ? a) 6.50% b) 6.11% c) 6.00% I need the answer ASAP!
Which of the following has the highest EAR? i) a corporate fixed-income index product with the quoted annual rate of 4.5% with quarterly compounding ii) a mutual fund investment with the quoted annual rate of 5.5% with semi-annual compounding iii) an investment product with EAR of 5.5% A. i B. ii C. iii D. not enough information