Question

3) The Rob U Blind Bank advertises capital savings at 7.128%
compounded semi-annually while Take Your Money Trust offers premium
savings at 7.1% compounded monthly. Suppose you have $4400.00 to
invest for two years.

a) Which deposit will earn more interest?

b) What is the difference in the amount of interest?

Answer #1

Bank-Keys offers 3.45% interest compounded daily on deposits,
while Bank-Hunted offers 3.50% interest compounded semi-annually.
Which bank would you invest your money? Why? Note: To answer this
question you can not invest any dollar and then see the amount you
will have. Question doesn’t provide how much money you will
invest?

1. If a bank advertises a savings account that pays a 6% nominal
interest rate compounded continuously, what is the effective annual
percentage rate?
2. Bank A offers a nominal annual interest rate of 5% compounded
daily, while Bank B offers continuous compounding at a 4.6% nominal
annual rate. If you deposit $3,000 with each bank, what will be the
difference in the two bank account balances after two years?
(Show ALL work and formulas used!)

A local bank is offering 9% compounded semi-annually on savings
accounts. If you deposit $1000 today, how much will you
have in 2.5 yrs.
a. 1,240.41
b. 1,295.03
c. 1,246.18
d. 1,166.32
e. 1192.5
A local bank is offering 9% compounded semi-annually on savings
accounts. If you deposit $1000 today, how much will you
have in 2.5 yrs.
a. 1,240.41
b. 1,295.03
c. 1,246.18
d. 1,166.32
e. 1192.5

Two local banking institutions offer the following interest on
deposits:
Blue Bank: 3% annual compounded semi-annually
Red Bank: 2.95% per year compounded monthly
Determine which of the following items is not true:
Select one:
a. The Red Bank offers better interest because it calculates
the interest monthly so it accumulates more frequently and is
therefore more attractive.
b. The APY (Annual Percentage Yield) of the Blue Bank is
3,022% per year.
c. The effective interest rate of the Red Bank...

How long will it take to double your savings at 10 percent
annual rate, compounded semi-annually?
14.21 years
9.01 years
7.10 years
12.90 years

You plan to deposit $5,500 into a savings account. There are
five great banks in your town offering terrific interest rates. If
your goal is to earn the greatest amount of interest, which bank
should you choose?
Bank DEF: 3.70%, compounded monthly
Bank ABC: 3.74%, compounded annually
Bank HIJ: 3.71% compounded semi-annually
Bank XYZ; 3.64% compounded quarterly
Bank KLM: 3.66% compounded continuously

1- Second Union Bank pays 5 percent simple interest on its
savings account balances, whereas Third Street Bank pays 5 percent
compounded annually. If you made a $12,000 deposit in each bank,
how much more money would you earn from your Third Street Bank
account at the end of 15 years?
2- Second Union Bank pays 5 percent simple interest on its
savings account balances, whereas Third Street Bank pays 5 percent
compounded annually. If you made a $12,000 deposit...

First City Bank pays 8 percent simple interest on its savings
account balances, whereas Second City Bank pays 8 percent interest
compounded annually.
Required:
If you made a deposit of $10,500 in each bank, how much more
money would you earn from your Second City Bank account at the end
of 10 years? (Do not round intermediate calculations and
round your answer to 2 decimal places (e.g.,
32.16).)
Difference
$

First City Bank pays 8 percent simple interest on its savings
account balances, whereas Second City Bank pays 8 percent interest
compounded annually.
If you made a deposit of $8,500 in each bank, how much more money
would you earn from your Second City Bank account at the end of 11
years?

eBook
Bank A pays 10% interest compounded annually on deposits, while
Bank B pays 9.5% compounded daily.
a. Based on the EAR (or EFF%), which bank should you use?
You would choose Bank A because its EAR is higher.
You would choose Bank B because its EAR is higher.
You would choose Bank A because its nominal interest rate is
higher.
You would choose Bank B because its nominal interest rate is
higher.
You are indifferent between the banks and...

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