5 - Exercise 2:a If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quartercompounded daily and continuously.Answerb- Based on these results, if you are a banker, which option you will offer to a customer who wish to set up asaving account (compounded daily or continuously interest rate). ExplainAnswer

If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quarter compounded daily and continuously. aswer Based on these results, if you are a banker, which option you will olfer to a customer who wish to set up a saving account (compounded daily or continuously interest rate). Explain

If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quarter compounded daily and continuously. aswer Based on these results, if you are a banker, which option you will olfer to a customer who wish to set up a saving account (compounded daily or continuously interest rate). Explain

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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Find the interest earned on $5,750 deposited into a savings account for 3 1/2 years at an annual interest rate of 4 1/2% a. What formula should be used? b. What are you trying to find and what variable does it represent in the formula? c. Solve the problem showing all of your work (must show all steps!!) d. Interpet your answer using a complete sentence You may use the box below to upoload a picture of your written explanation or type it out in the box. Use the "mountain" button to add pictures.
To figure out how much total interest that you earn when you reach your investment goal, you ____________. Select one: a. interest rate % * total payments - amount borrowed b. interest rate % * amount borrowed c. # payments * monthly payment - interest rate % * amount borrowed d. # of payments * monthly payment- amount borrowed
pls refer to the image attached, 1. suppose that you have the capacity to pay, would you rather borrow a loan that is amortized monthly, or one that is amortized quarterly? 2. what is your considerations when availing a loan? (quantitative or qualitative considerations) Discuss.
Consider a credit card with a balance of $7000. You wish to pay off the credit card in each scenario. Calculate the following. Round your answer to the nearest cent, if necessary.a. The amount of a monthly payment within the time frame givenb. The total amount paid over the time period12. APR of 17.99% paid off within 1 year APR of 24% paid off within 3 years
If you borrow $9000 at an annual percentage rate (APR) of r (as a decimal) from a bank, and if you wish to pay off the loan in 3 years, then your monthly payment M (in dollars) can be calculated using: M = 9000 (er/12-1) / 1 - e-3r 1) Describe what M (0.035) would represent in terms of the loan, APR, and time. 2) If you are only able to afford a max monthly payment of $300, describe how you could use the above formula to figure out what the highest interest rate the bank could offer you and you would still be able to afford the monthly payments. In addition, determine the maximum interest rate that you could afford.
Calculate the CAT (total annual cost) for option 1 and then find which option is better to ask for a loan and explain why is it better. 1. Personal Loan MNL Bank 2.25% simple monthly interest rate 2. Savings Bank CAT= 30% 3. XYZ Bank CAT= 28.30% 4. 123 Bank CAT= 26.64%
You want to open a savings account and you have 3 choices: 1) a saving account that pays interest of 7.2% compounded quarterly (In other words, it offers an APR=7.2%, compounded quarterly), 2) a saving account that pays interest of 6.8% compounded monthly, and 3) a saving account that pays interest of 7% continuously compounded? Which one do you prefer?
In your own words, explain how compounding works. According to the rule of 72, if you deposit $100 in an account that pays 9% compound interest, how long will it take that initial deposit to reach $200? Use the matrix given below. For each type of investment, record this information: • Is the risk high, moderate, or low? • Is the return high, moderate, or low? • How does this type of investment work? Explain in one or two sentences.
You are shopping around for different bank accounts and have found several different banking institutions offering different types of interest. Calculate the effective rate of return (also known as the annual percentage yield (APY)) of each bank account. Hint: rE = (1+ 5)" – 1 (Enter your answers as a percentage rounded to 2 decimal places.) (a) Wesbanco offers an account 7.28 % interest compounded daily. APY = Number (b) PNC offers an account with 7.29 % interest compounded weekly. APY = Number (c) United Bank offers an account with 7.25 % interest compounded monthly. APY = Number % (d) BB&T offers an account with 7.32 % interest compounded quarterly. APY = Number (e) Navy Federal offers an account with 7.34 % interest compounded semi-annually. APY = Number (f) Assuming our goal is to have the best return, which account should we choose? O Wesbanco O PNC O United Bank BB&T O Navy Federal
COMPARING APR. You are offered two credit cards. The first is a credit card (CARD A) that has an APR of 24.99%. You are also offered a card (CARD B) that has 21.99% interest, but charges $100 annually. Which card that was offered is a better card? Show work.
Suppose you borrow from a bank $1,756.06 today (t=0). You agree to pay back $3,637.64 in 4 years (t=4). The interest rate (%) that the bank charge you is closest to ________%. Input your answer without the % sign and round your answer to two decimal places.
Assume you take out a car loan of $8,600 that calls for 48 monthly payments of $300 each. a. What is the APR of the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.) b. What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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