Paul makes one investment of 500 on January 1, 2005 and collects 600 on January 1, 2007 for an annual effective yield of X%. Toby invests 100 on January 1, 2005, invests another 100 on January 1, 2006, and collects an amount Z on January 1, 2007 for an annual effective yield of Y%. The combination of Paul's and Toby's cash flows, produces an annual effective yield of 10%. Calculate Y% - X%. (A) 0% (B) 1% (C) 2% (D) 3% (E) 4%

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
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Paul makes one investment of 500 on January 1, 2005 and collects 600 on
January 1, 2007 for an annual effective yield of X%. Toby invests 100 on
January 1, 2005, invests another 100 on January 1, 2006, and collects an
amount Z on January 1, 2007 for an annual effective yield of Y%. The
combination of Paul's and Toby's cash flows, produces an annual effective
yield of 10%.
Calculate Y% - X%.
(A) 0%
(B) 1%
(C) 2%
(D) 3%
(E) 4%
Transcribed Image Text:Paul makes one investment of 500 on January 1, 2005 and collects 600 on January 1, 2007 for an annual effective yield of X%. Toby invests 100 on January 1, 2005, invests another 100 on January 1, 2006, and collects an amount Z on January 1, 2007 for an annual effective yield of Y%. The combination of Paul's and Toby's cash flows, produces an annual effective yield of 10%. Calculate Y% - X%. (A) 0% (B) 1% (C) 2% (D) 3% (E) 4%
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