For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.7% compounded monthly on the cash value of their policies Company 2: pays 4.72% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2

For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.7% compounded monthly on the cash value of their policies Company 2: pays 4.72% compounded semiannually on the cash value of their policies What is the APY (annual percentage yield) offered by each company? (Round your answers to the nearest hundredth.) Company 1 % % Company 2 Which company offers a higher yield? Company 1 Company 2

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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For life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.2% compounded monthly on the cash value of their policies Company 2: pays 4.21% compounded semiannually on the cash value of their policies What is the APY offered by each company? (Round your answers to the nearest hundredth.) Company 1 % Company 2 %
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