Suppose you saw a sign at your local bank that said, "4.3% rate compounded monthly – 4.7% Annual Percentage Yield (APY)." Is thereanything wrong with the sign? Explain.Select the correct choice below and, if necessary, fill in the answer box to complete your choice.O A. Yes. The APY is incorrect. The correct APY is(Round to the nearest hundredth as needed.)O B. Yes. The number of compounding periods is incorrect. Interest should be compounded daily.O C. No. The information on the sign is correct.

Effective Annual Rate is a modified rate of return where it considers the compounding effect.…

Answered: Suppose you saw a sign at your local…

Suppose you saw a sign at your local bank that said, "4.3% rate compounded monthly- 4.7% Annual Percentage Yield (APY)." Is there anything wrong with the sign? 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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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

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Suppose you saw a sign at your local bank that said, "4.3% rate compounded monthly – 4.7% Annual Percentage Yield (APY)." Is there
anything wrong with the sign? Explain.
Select the correct choice below and, if necessary, fill in the answer box to complete your choice.
O A. Yes. The APY is incorrect. The correct APY is
(Round to the nearest hundredth as needed.)
O B. Yes. The number of compounding periods is incorrect. Interest should be compounded daily.
O C. No. The information on the sign is correct.

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