Question

1. If a bank advertises a savings account that pays a 6% nominal interest rate compounded...

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!)

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
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
Similar Questions
Bank A offers a nominal annual interest rate of 4% compounded daily, while Bank B offers...
Bank A offers a nominal annual interest rate of 4% compounded daily, while Bank B offers continuous compounding at a 3.4% nominal annual rate. If you deposit $5,000 with each bank, what will be the difference in the two bank account balances after 3 years?
5A-1 FV CONTINUOUS COMPOUNDING If you receive $15,000 today and can invest it at a 6%...
5A-1 FV CONTINUOUS COMPOUNDING If you receive $15,000 today and can invest it at a 6% annual rate compounded continuously, what will be your ending value after 15 years? 5A-2 PV CONTINUOUS COMPOUNDING In 7 years, you are scheduled to receive money from a trust established for you by your grandparents. When the trust matures there will be $200,000 in the account. If the account earns 9% compounded continuously, how much is in the account today? 5A-3 FV CONTINUOUS COMPOUNDING...
1. A bank offers 6.00% on savings accounts. What is the effective annual rate if interest...
1. A bank offers 6.00% on savings accounts. What is the effective annual rate if interest is compounded daily? Answer Format: Percentage Round to: 4 decimal places (Example: 9.2434% 2. A bank offers 9.00% on savings accounts. What is the effective annual rate if interest is compounded continuously? Answer Format: Percentage Round to: 4 decimal places
One bank advertises a nominal rate of 5.81% compounded semiannually. A second bank advertises a nominal...
One bank advertises a nominal rate of 5.81% compounded semiannually. A second bank advertises a nominal rate of 5.72% compounded weekly. What are the effective yields? (Round your answers to two decimal places.) first bank % second bank % In which bank would you deposit your money? first banksecond bank    
3) The Rob U Blind Bank advertises capital savings at 7.128% compounded semi-annually while Take Your...
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?
Suppose that you have a bank account with a balance of $4,516.10 at the beginning of...
Suppose that you have a bank account with a balance of $4,516.10 at the beginning of the year and $4,566.10 at the end of the year. Your bank advertises "continuous compounding," but in fact, it compounds continuously over each 24-hour day and posts interest to accounts daily. (Round your answers to two decimal places.) a)What effective rate did you receive? % (b)What nominal rate is the calculation based on? % (c)What difference is there between what the bank is doing...
If you deposit $2000 in a savings account that pays an interest equal to 6% Compounded...
If you deposit $2000 in a savings account that pays an interest equal to 6% Compounded continuously. Whats the balance at the end of 3 years?
The BCS National Bank pays 4% nominal interest on special three-year certificates. What is the effective...
The BCS National Bank pays 4% nominal interest on special three-year certificates. What is the effective annual rate if the interest is compounded a. every three months? b. daily? c. continuously
7. What is the effective annual interest rate for a bank account that pays a continuously...
7. What is the effective annual interest rate for a bank account that pays a continuously compounded interest rate of 8%?
You have some money on deposit in a bank account which pays a nominal APR (or...
You have some money on deposit in a bank account which pays a nominal APR (or quoted) rate of 8.0944 percent, but with interest compounded daily (using a 365 day year). Your friend owns a security which calls for the payment of $10,000 after 27 months. Your friend's security is just as safe as your bank deposit, and your friend offers to sell it to you for $8,000 today. If you buy the security, by how much will the effective...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT