You are offered a note which pays $1,000 in 15 months (or 456 days) for $850. You have $850 which pays a 6.76649% nominal rate, with 365 daily compounding, which is a daily rate of .018538% and an EAR of 7%. You plan to leave the money in the bank if you do not buy the note. The note is riskless. Should you buy it? Use three ways to check the decision.

Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
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You are offered a note which pays $1,000 in 15 months (or 456 days) for $850. You have $850
which pays a 6.76649% nominal rate, with 365 daily compounding, which is a daily rate
of .018538% and an EAR of 7%. You plan to leave the money in the bank if you do not buy the
note. The note is riskless. Should you buy it? Use three ways to check the decision.
Transcribed Image Text:You are offered a note which pays $1,000 in 15 months (or 456 days) for $850. You have $850 which pays a 6.76649% nominal rate, with 365 daily compounding, which is a daily rate of .018538% and an EAR of 7%. You plan to leave the money in the bank if you do not buy the note. The note is riskless. Should you buy it? Use three ways to check the decision.
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