True or false ... It is preferred to have a savings account with annual compounding rather than monthly compounding. (Explain)
True or false ... It is preferred to have a savings account with annual compounding rather...
The annual percentage yield (APY) for a savings account with a monthly compounding period is O not related to the nominal interest rate. O always lower than the nominal interest rate. 0 the same as the nominal interest rate. O always higher than the nominal interest rate.
You have deposited your savings into an investment account each month. You are hoping to earn enough interest in order to make the down payment on a new car. If your account earns a nominal rate of 4% interest per year, then which compounding frequency will give you the highest future balance in your account over time? All of the above will give the same result if the nominal rate is always 4% Daily compounding Annual compounding Weekly compounding Monthly...
Which would Seth rather have at the end of one year: An account paying an annual effective rate of 10% or an account with a 9.60% APR compounded monthly? An account paying an annual effective rate of 10% or an account with a 9.60% APR compounded quarterly? An account paying an annual effective rate of 10% or an account with a 10% APR compounded annually?
Practice Problems 1. You invest $8,000 in a savings account, the interest rates a savings account, the interest rate is 12% per year and the length of time is 15 years. Compounding is monthly. What is savings account at the end of ten years? 2. What would be the answer if compounding is every six months
Suppose that each week, you deposit $44 into a savings account whose annual rate is 2.8% with weekly compounding. How much will you have in the account after 9 years?
In general, investors prefer compounding interest on their investments instead of simple interest. True False Bond holders have first claim on assets in the event of a bankruptcy, so they are less risky than common stock. True False An asset or stock with a beta less than 1.0 means the stock is more risky than the market in general. True False
Preferred stock have Voting Rights? True Or False
Number 7 Consider an account with an APR of 5%. Calculate the APY with quarterly compounding, monthly compounding, and daily compounding, Describe how changing the compounding period affects the annual yield. Explain why APR and APY are the same with annual compounding. Explain why APR and APY are different with daily compounding. Does APY depend on the starting principal? Why or why not? • How does APY depend on the number of compounding during a year? Explain.
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.
Alice has $225,000 in savings in an investment account. She is able to earn an APR of 4.5% in her investment account (which has monthly compounding). Ignore tax. She decided to buy a house of take out a 30-year mortgage. The mortgage will have an APR of 4.5% with monthly compounding and monthly payments. The bank requires at least a 20% house value down payment. She decides to buy the largest possible house given her savings. What is her monthly...