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Periodic interest rates. You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.035%, a weekly compounded rate of 0.325%, a monthly compounded rate of 1.25%, a quarterly compounded rater of 3.75%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 14%? What is the effective annual rate (EAR) of a daily compounded rate of 0.035%? % (Round to two decimal places.) What is the EAR of a weekly compounded rate of 0.325%? D% (Round to two decimal places.) What is the EAR of a monthly compounded rate of 1.25%? % (Round to two decimal places.) What is the EAR of a quarterly compounded rate of 3.75%? % (Round to two decimal places.) What is the EAR of a semiannually compounded rate of 7.5%? % (Round to two decimal places.) What is the EAR of an annually compounded rate of 14%? D% (Round to two decimal places.) Which periodic rate would you rather have for your savings account? (Select the best response.)

Periodic interest rates. You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.035%, a weekly compounded rate of 0.325%, a monthly compounded rate of 1.25%, a quarterly compounded rater of 3.75%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 14%? What is the effective annual rate (EAR) of a daily compounded rate of 0.035%? % (Round to two decimal places.) What is the EAR of a weekly compounded rate of 0.325%? D% (Round to two decimal places.) What is the EAR of a monthly compounded rate of 1.25%? % (Round to two decimal places.) What is the EAR of a quarterly compounded rate of 3.75%? % (Round to two decimal places.) What is the EAR of a semiannually compounded rate of 7.5%? % (Round to two decimal places.) What is the EAR of an annually compounded rate of 14%? D% (Round to two decimal places.) Which periodic rate would you rather have for your savings account? (Select the best response.)

Essentials Of Investments
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
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**Periodic Interest Rates** You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.035%, a weekly compounded rate of 0.325%, a monthly compounded rate of 1.25%, a quarterly compounded rate of 3.75%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 14%? 1. **What is the effective annual rate (EAR) of a daily compounded rate of 0.035%?** - [_]_ % (Round to two decimal places.) 2. **What is the EAR of a weekly compounded rate of 0.325%?** - [_]_ % (Round to two decimal places.) 3. **What is the EAR of a monthly compounded rate of 1.25%?** - [_]_ % (Round to two decimal places.) 4. **What is the EAR of a quarterly compounded rate of 3.75%?** - [_]_ % (Round to two decimal places.) 5. **What is the EAR of a semiannually compounded rate of 7.5%?** - [_]_ % (Round to two decimal places.) 6. **What is the EAR of an annually compounded rate of 14%?** - [_]_ % (Round to two decimal places.) **Which periodic rate would you rather have for your savings account?** (Select the best response.)
Transcribed Image Text:**Periodic Interest Rates** You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.035%, a weekly compounded rate of 0.325%, a monthly compounded rate of 1.25%, a quarterly compounded rate of 3.75%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 14%? 1. **What is the effective annual rate (EAR) of a daily compounded rate of 0.035%?** - [_]_ % (Round to two decimal places.) 2. **What is the EAR of a weekly compounded rate of 0.325%?** - [_]_ % (Round to two decimal places.) 3. **What is the EAR of a monthly compounded rate of 1.25%?** - [_]_ % (Round to two decimal places.) 4. **What is the EAR of a quarterly compounded rate of 3.75%?** - [_]_ % (Round to two decimal places.) 5. **What is the EAR of a semiannually compounded rate of 7.5%?** - [_]_ % (Round to two decimal places.) 6. **What is the EAR of an annually compounded rate of 14%?** - [_]_ % (Round to two decimal places.) **Which periodic rate would you rather have for your savings account?** (Select the best response.)
**Savings Account Compounding Options:** *Which periodic rate would you rather have for your savings account? (Select the best response.)* - **A.** A semiannual compounded rate of 7.5%. - **B.** A weekly compounded rate of 0.325%. - **C.** A quarterly compounded rate of 3.75%. - **D.** An annually compounded rate of 14%. - **E.** A monthly compounded rate of 1.25%. - **F.** A daily compounded rate of 0.035%. This prompt presents six different compounding options for savings accounts. The decision involves understanding how often the interest is compounded and what the effective annual rate would be for each option. Analyzing which option results in the highest yield over a year would guide the best choice.
Transcribed Image Text:**Savings Account Compounding Options:** *Which periodic rate would you rather have for your savings account? (Select the best response.)* - **A.** A semiannual compounded rate of 7.5%. - **B.** A weekly compounded rate of 0.325%. - **C.** A quarterly compounded rate of 3.75%. - **D.** An annually compounded rate of 14%. - **E.** A monthly compounded rate of 1.25%. - **F.** A daily compounded rate of 0.035%. This prompt presents six different compounding options for savings accounts. The decision involves understanding how often the interest is compounded and what the effective annual rate would be for each option. Analyzing which option results in the highest yield over a year would guide the best choice.
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