A. To determine which bank you should deposit your money in, calculate how much money you will earn at the end of 5 years at each bank. (round your answer to 2 decimal places). B. You understand that the more frequently interest is earned in each year, the more you will have at the end of your investment horizon. Is this always true? Discuss this statement considering your answer from the previous part.
A. To determine which bank you should deposit your money in, calculate how much money you will earn at the end of 5 years at each bank. (round your answer to 2 decimal places). B. You understand that the more frequently interest is earned in each year, the more you will have at the end of your investment horizon. Is this always true? Discuss this statement considering your answer from the previous part.
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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Question
1. You have just received a bonus of $15,750 and are looking to deposit the money in a bank for 5 years. You have investigated the annual deposit rate of several Australian banks and collected the following information:
|
Bank |
Annual rate |
Compounding frequency |
|
Commonwealth Bank of Australia |
0.50% |
Monthly |
|
Westpac Banking Corporation |
0.90% |
Quarterly |
|
Australia and New Zealand Banking Group |
0.75% |
Daily |
|
National Australia Bank |
0.80% |
Annually |
- A. To determine which bank you should deposit your money in, calculate how much money you will earn at the end of 5 years at each bank. (round your answer to 2 decimal places).
- B. You understand that the more frequently interest is earned in each year, the more you will have at the end of your investment horizon. Is this always true? Discuss this statement considering your answer from the previous part.
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