Question

You are planning to deposit $1,000 in a savings account. Account A compounds monthly while account B compounds semiannually. If both accounts have the same quoted annual rate of interest, you should choose _______________.

A. account B because it has a higher APR

B. account A because it has a higher EAR

C. account B because it is compounded more often

D. account A because it is compounded at a lower discount rate

Answer #1

You are planning to save your Christmas bonuses from work and
are comparing savings accounts: Account A compounds semiannually
while account B compounds monthly. If both accounts have the same
quoted annual rate of interest and you place only the bonuses in
the account, you should choose __________________________.
Select one:
a. either account, since both quote the same rate of
interest
b. account A because it has a higher APR
c. account B because it is compounded more often
d....

You are planning to save your Christmas bonuses from work and
are comparing savings accounts: Account A compounds semi-annually
while account B compounds monthly. If both accounts have the same
effective annual rate of interest and you place only the bonuses in
the account, you should choose _
.
Either since you would be indifferent between the two.
b.
Account B because it has a higher APR.
c.
Account B because it is compounded more often.
d.
Account A because...

16. You have $1,000 to deposit in a savings account for 1 year.
You can get a passbook savings
account drawing 7.75% interest compounded continuously, or a
certificate of deposit paying 8%
compounded quarterly, or a savings bond paying 8.25% compounded
annually. Which alternative
should you take?
a. 7.75% compounded continuously
b. 8% compounded quarterly
c. 8.25% compounded annually
d. all of the above are have equal annualized yields
17. You are considering two investments described below:
Investment
A 10%...

Downtown Bank is offering 3.6 percent compounded monthly on its
savings accounts. You deposit $1,000 today. How much will you have
in your account 10 years from now?
Group of answer choices
$1324.29
$1424.29
$1400
$1432.56
$1360

2. You want a savings account to grow from $1,000 to $5,000
within two years. Assume the bank provides a 3.2% annual interest
rate compounded monthly. What is the math formula to calculate how
much you must deposit each month to meet your savings goal?

Assume that you deposit $1,000 in a bank account that promises a
fixed rate of interest of 4% per year for 10 years with annual
compounding. You want to know the balance in your account at the
end of 10 years. Assume that you do not make any withdrawals and
that the bank stays solvent for 10 years (and thus can keep its
promise to pay you in 10 years). Across the street, the savings
& loan offers a similar...

You are planning to deposit $100,000 into a bank account and to
leave the funds on deposit for 12 years. Bank A pays interest at a
rate of 3%, compounded annually. Bank B pays interest at a rate of
2.5%, compounded semiannually. Bank C pays interest at a rate of
2.2% compounded daily.
If you put your money into Bank A, how much will you have in
the account after the 12 years?
If you put your money into Bank...

You want to deposit $3,000 now into a savings account for 5
years. The Northeast bank offers an APR of 12% with simple interest
while the Southwest bank offers an APR of 10% with monthly
compounding. Which bank would you prefer and why?
a) The Northeast bank because it offers an additional $ 229 in
interest.
b) The Northeast bank because it offers an additional $ 130 in
interest.
c) The Southwest bank because it offers an additional $135 in...

If you deposit $3000 in a savings account for six years, and
your bank has an interest rate of 6.00% for the first $500 that was
deposited and 0.10% for the remaining $2500. The interest rate is
compounded monthly. What would the amount be in the account after
six years?

Periodic interest rates.
You have a savings account in which you leave the funds for one
year without adding to or withdrawing from the account. Which would
you rather have: a daily compounded rate of 0.055%, a weekly
compounded rate of 0.305%, a monthly compounded rate of 1.55%, a
quarterly compounded rate of 4.50%, a semiannually compounded rate
of 7%, or an annually compounded rate of 17%?
Calculate the EAR for each of the possible rates.

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