a. Based on the EAR (or EFF%), which bank should you use? b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest,

a. Based on the EAR (or EFF%), which bank should you use? b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest,

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

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Similar questions

What happens to the interest if I pay more than my payment amount on a car or home loan? What happens to the amount that you pay overall then?
Which of the following statements are most likely to be false? The effective annual interest rate will always be greater than the quoted (or annual percentage) interest rate. All else being the same, the present value of a five-year, $10,000 annuity due will be higher than the present value of a five-year, $10,000 ordinary annuity. If you were depositing funds at a bank, and the quoted interest rate was 4% p.a., you would be better off if the bank used semi-annual compounding rather than quarterly compounding. a. I and II only. b. I and III only. c. II and III only. d. I, II and III.
Which will result in a higher net worth? I. Paying down debt with cash flows. II. Making regular periodic savings. III. Acquiring long-term assets with a line of credit. IV. Purchasing a condo with a mortgage and using funds from the Tax-Free Savings Account (TFSA) for the down payment. IV only II and IV I and II I and III III and IV
4. How much payment Z should he make on the exact time after the last regular payment has been made to completely discharge this loan?
2.-When deciding to accept a cash discount from a supplier, on what day is it advisable to take the financing? A) On the last day of the discount period, to see if they are able to meet the discount. B) On the first day of the discount period, so why wait? C) On any day of the discount period D) In the middle of the discount period, so there is no risk.
17. Assume that a bank obtains most of its funds from long-term borrowed funds such as Federal Home Loan Bank borrowings. The bank's assets are in the form of loans with rates that adjust affected if interest rates every three months. In the next three months, the bank would be increase. A. negatively. B. favorably. C. unaffected.
Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The purchase-and-assumption method? Which method is more costly to taxpayers? Using the payoff method, the $300,000 deposit is worth $ (Round to the nearest dollar) Using the purchase-and-assumption method, a deposit of $300,000 is worth $ (Round to the nearest dollar) Which method is more costly to taxpayers? Select the best answer: A. The payoff method is more costly, since taxpayers will only pay $0.10 on the dollar. B. The purchase and assumption method is more costly, because depositors receive the full value of their deposits. C. The purchase and assumption method is more costly, because depositors will refuse to keep account balances in excess of $100,000 in a single bank. D. The payoff method is more costly, since the cost to insure the fund will be lower.
3. You make a deposit of $100 in year 1, $200 in year 3, $500 in year 7. Interest rate is 6%. How much will be accumulated in your account in year 12. Please do not use excel. Include cashflow diagram if possible.
The interest rate that banks provide to the customers for the savings deposit account is more than current deposit account but less than: a. Overdraft account b. Savings deposit account c. Flexible account d. Fixed deposit account
If you were given a choice of investing in an account that paid quarterly interest and one that paid monthly interest, which one should you choose if they both offer the same stated interest rate and why?
3. Which type of student loan will the government pay your interest while enrolled and even up to 6 months after graduation A. State B. Private C. Subsidized D. Unsubsidized
Which of the following statements correctly describes aspects of simple interest as discussed in lectures? Group of answer choices A) With simple interest, the future value of any cash flow is simply its current value discounted back at a rate of r% per period for n periods. B) None of the other statements are correct C) A loan that has been created that pays simple interest, will involve interest payments that are calculated on the basis of both the principal amount borrowed as well as any interest that has accumulated to date. D) By convention, simple interest is the main method used for the pricing of long-term bonds. E) More than one of the other statements are correct

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