On a $10,000 principal investment, a bank offered interest rates of 3.45% on 270- to 364-day GIC's and 3.15% on 180- to 269-day GICS. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICS? (Assume that the interest rate on 180- to 269-day GICS will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)

On a $10,000 principal investment, a bank offered interest rates of 3.45% on 270- to 364-day GIC's and 3.15% on 180- to 269-day GICS. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICS? (Assume that the interest rate on 180- to 269-day GICS will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)

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

Suppose you take a 3/1 interest-only ARM for $100,000, monthly payments, 30-year term. The initial contract rate is 4.00% and the contract rate for year 4 is 6.50%. What is the balance of the loan at the end of year 4? 94,892.15 98,591.88 96,483.13 95,347.22
You plan to borrow $40,100 at a 6.9% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? O a. $2,446.20 O b. $2,479.22 O c. $2,766.90 O d. $6,936.17 O e. $7,414.76
One bank offers to loan you money at an interest rate of 12% compounded quarterly, and another bank offers to loan you money at 11.8% compounded continuously. Which loan would you prefer, and why?
Bank K is about to sign a loan agreement with a mining company.The current LIBOR rate is 8%.The risk premium for the company has been estimated as 3% and the origination fee will be 0.1875 percent.The bank will be requesting a 9% compensating balance requirement.If the reserve requirement is 6%,what is the promised gross return on the loan?
Find the maturity value FV of the given loan amount. (Round your answer to the nearest cent.) $1,400 borrowed at 7 1 8 % for three years
A borrower has the option of accepting a fixed rate loan for five years at 10% or a floating rate loan of LIBOR plus 3%. Assume the current LIBOR rate is 6%. If the floating rate loan was chosen, did the borrower make the right decision if the LIBOR rates at the beginning of the next four years are 6.5%, 7.0%, 7.5%, and 7.75%? Note that the LIBOR rate at the beginning of the year is used to determine the payment at the end of the year.
A mortgage for $200,000 with interest rate of 7.20%, fixed monthly payments, and term of 30 years was originated 10 years ago. If the loan's current balance is refinanced for the rest of the original term of at the rate of 6.30% with monthly payments, what is the implied annual savings rate given that the existing loan has a refinancing fee of 4% of the remaining balance at the time of refinancing and that loan is expected to be outstanding for 9 years? Selected Answer: Below 6% O A. Correct Answer: Е. Between 12% and 14%
For a short-term cash requirement of 85,000 TL, a 12-month maturity loan with equal installments will be withdrawn from the bank. If the monthly interest rate is 1.75, prepare the loan payment table (loan amortization table) by finding the monthly payment amount.
An investment promises two payments of $570, on dates three and six months from today. If the required rate of return on the investment is 4.7%:What is the value of the investment today? (Do not round intermediate calculations and round your final answer to 2 decimal places.Value today $.
A floating rate mortgage loan is made for $190,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,520. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,520?
For a short-term cash requirement of $ 85,000, a 12-month term loan with equal installments will be drawn from the bank. If the monthly interest rate is 1.75, prepare the loan payment table (loan amortization table) by finding the monthly payment amount.
You come across two banks offering different compounding interest rates. Public Bank offers 12 percent compounded semi-annually while Maybank offers 11.8 percent compounded monthly. Which bank should you deposit in? Show all relevant workings

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