. An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. Complete the following table by computing the nominal (or stated), periodic, and effective interest rates for this investment opportunity. Interest Rates Value Nominal rate Periodic rate Effective annual rate 2. Clancy needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 4.00%. However, since the bank is compounding its interest daily, the loan will impose an effective interest rate of ________ on his loan. 3. Suppose you decide to deposit $15,000 into a savings account that pays a nominal rate of 5.20%, but interest is compounded daily. Based on a 365-day year, how much would you have in your account after six months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.) $14,931.97 $15,239.84 $15,393.78 $15,701.66
. An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. Complete the following table by computing the nominal (or stated), periodic, and effective interest rates for this investment opportunity. Interest Rates Value Nominal rate Periodic rate Effective annual rate 2. Clancy needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 4.00%. However, since the bank is compounding its interest daily, the loan will impose an effective interest rate of ________ on his loan. 3. Suppose you decide to deposit $15,000 into a savings account that pays a nominal rate of 5.20%, but interest is compounded daily. Based on a 365-day year, how much would you have in your account after six months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.) $14,931.97 $15,239.84 $15,393.78 $15,701.66
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
no. 12
1. An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. Complete the following table by computing the nominal (or stated), periodic, and effective interest rates for this investment opportunity.
|
Interest Rates
|
Value
|
|---|---|
| Nominal rate | |
| Periodic rate | |
| Effective annual rate |
2. Clancy needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 4.00%. However, since the bank is compounding its interest daily, the loan will impose an effective interest rate of ________ on his loan.
3.
Suppose you decide to deposit $15,000 into a savings account that pays a nominal rate of 5.20%, but interest is compounded daily. Based on a 365-day year, how much would you have in your account after six months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)
- $14,931.97
- $15,239.84
- $15,393.78
- $15,701.66
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