ZuoTi.Pro
Question

Question 25 (3.4 points) Your bank offers 3-year certificates of deposit with a stated rate of interest of 17.54 % p.a., comp
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Apr =17.54%
Quarterly rate =APR/4 =17.54%/4
EAR=(1+APR)^4-1 =(1+17.54%/4)^4-1 =18.7278%

When EAR is same when compounded monthly then
18.7278%=(1+APR/12)^12-1
Minimum APR =((1.187278)^(1/12)-1)*12 =17.29%

0 0
Add a comment
Know the answer?
Add Answer to:
Question 25 (3.4 points) Your bank offers 3-year certificates of deposit with a stated rate of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • please show work!! Your bank offers 3-year certificates of deposit with a stated rate of interest of 12% p.a, comp...

    please show work!! Your bank offers 3-year certificates of deposit with a stated rate of interest of 12% p.a, compounded quarterly. Your cousin (who works at Acme Bank and Trust, a competitor) wants to know what stated rate of interest you would require from them in order to switch your business to their bank. Acme's CD's are compounded on a monthly basis. What is the minimum stated interest rate you should ask for from Acme in order to make you...

  • please show work!! Your bank offers 3-year certificates of deposit with a stated rate of interest...

    please show work!! Your bank offers 3-year certificates of deposit with a stated rate of interest of 12% p.a., compounded quarterly. Your cousin (who works at Acme Bank and Trust, a competitor) wants to know what stated rate of interest you would require from them in order to switch your business to their bank. Acme's CD's are compounded on a monthly basis. What is the minimum stated interest rate you should ask for from Acme in order to make you...

  • 25. Your bank offers 3-year certificates of deposit with a stated rate of interest of 16.40%...

    25. Your bank offers 3-year certificates of deposit with a stated rate of interest of 16.40% p.a., compounded quarterly. Your cousin (who works at Acme Bank and Trust, a competitor) wants to know what stated rate of interest you would require from them in order to switch your business to their bank. Acme's CD's are compounded on a monthly basis. What is the minimum stated interest rate you should ask for from Acme in order to make you indifferent to...

  • Your bank offers 3-year certificates of deposit with a stated rate of interest of 11.82 %...

    Your bank offers 3-year certificates of deposit with a stated rate of interest of 11.82 % p.a., compounded quarterly. Your cousin (who works at Acme Bank and Trust, a competitor) wants to know what stated rate of interest you would require from them in order to switch your business to their bank. Acme's CD's are compounded on a monthly basis. What is the minimum stated interest rate you should ask for from Acme in order to make you indifferent to...

  • please show work!! You are about to deposit $671 into one of the following savings accounts...

    please show work!! You are about to deposit $671 into one of the following savings 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:...

  • Suppose you have several choices for placing your savings in insured bank certificates of deposit. They...

    Suppose you have several choices for placing your savings in insured bank certificates of deposit. They all pay 5 percent per year – the going interest rate for bank deposits. Most observers expect interest rates to remain at 5 percent for some time to come. One is for 1 year, the second is for 5 years, and the third is for 10 years. Which of the following is the best financial investment? A The one-year certificate. B The five-year certificate....

  • Certificates of Deposit and Effective Annual Yield Your money earns interest at a higher rate when...

    Certificates of Deposit and Effective Annual Yield Your money earns interest at a higher rate when you buy a certificate of deposit than it does when you invest it in a regular savings account. Most certificates eam interest compounded daily. The annual yield is the rate at which your money earns simple interest in one year. INTEREST EARNED - AMOUNT - ORIGINAL PRINCIPAL INTEREST FOR ONE YEAR PRINCIPAL ANNUAL YIELD - Use the table below to answer the problems. AMOUNT...

  • please include details Bank of Baruch Liabilities: 1 year Certificates of Deposit $ 225m 5 year...

    please include details Bank of Baruch Liabilities: 1 year Certificates of Deposit $ 225m 5 year Certificates of Deposit Overnight Fed Funds Equity Assets 91 day US Treasury bills 2 year US Treasury notes 5 year corporate loans-floating rate: LIBOR+150bp, quarterly roll date S 75m $150m 35m 105m 15m S55m 10 year floating rate mortgages 9-month roll dates $100m 33.What is the bank's debt a. 3.95% asset ratio? b. 4.11% c. 96.05% d. 24.33 f. 32.88% 34. What does your...

  • A bank offers your firm a revolving credit arrangement for up to $66 million at an interest rate of 1.65 percent per...

    A bank offers your firm a revolving credit arrangement for up to $66 million at an interest rate of 1.65 percent per quarter. The bank also requires you to maintain a compensating balance of 2 percent against the unused portion of the credit line, to be deposited in a non-interest-bearing account. Assume you have a short-term investment account at the bank that pays 1.00 percent per quarter, and assume that the bank uses compound interest on its revolving credit loans....

  • Come and Go Bank offers your firm a discount interest loan with an interest rate of...

    Come and Go Bank offers your firm a discount interest loan with an interest rate of 9 percent for up to $21 million, and in addition requires you to maintain a 2 percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate= %

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT