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Question 4 Which of the following bank accounts has the LOWEST effective annual return? An account...
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.
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%...
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Iesument banks generally J, Wilereas commercial banks generally help Namies raise large blocks of capital from investors. Which of the following bank accounts has the highest effective annual return? An account that pays 9% nominal interest with monthly compounding, An account that pays 9% nominal interest with annual compounding. An account that pays 8% nominal interest with daily compounding An account that pays 8% nominal interest with monthly compounding, An account that pays 9% nominal interest with daily compounding....
Rachel is advising Gunther on selecting a savings account. Which of the following banks provides Gunther with the highest effective rate of interest? A). Bank 1; 6.1% with annual compounding. B). Bank 2; 6.0% with monthly compounding. C). Bank 3; 6.0% with annual compounding. D). Bank 4; 6.0% with quarterly compounding. E). Bank 5; 6.0% with daily (365-day) compounding.
The table below shows the rate of return, expressed as an APR, for four investment opportunities. The LOWEST effective annual rate of return you could earn on any of these investments is closest to _____________. Investment Rate of Return (APR) Compounding A 6.3830% Annual B 6.2116% Daily C 6.2834% Quarterly D 6.2744% Monthly answers choices are a. 6.4580% b. 6.4080% c. 6.3830% d. 6.4330%
a. A bank offers 5.00% on savings accounts. What is the effective annual rate if interest is compounded quarterly? b. A bank offers 5.00% on savings accounts. What is the effective annual rate if interest is compounded monthly?
a. For an interest rate of 100% per year compounded continuously, calculate the effective daily, weekly, monthly, quarterly, semiannually, and annually interest rates. b. An investor requires an effective return of at least 12% per year. What is the minimum annual nominal rate that is acceptable for continuous compounding?
A bank advertises it pays 4% annual interest, com pounded daily, on savings accounts, provided the money is left in the account for 5 years. What is the effective annual interest rate?
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...
One of the new deposit construction of our competitor credit bank offers 12% annual nominal interest rate but pays all interest semi-annually. Our bank wants to create a deposit, which pays quarterly, and its effective rate of return is 1% higher than the rival's effective rate of return. What nominal interest rate should we determine for the new product?