Your bank is offering you an account that will pay 20% interest (an effective two-year rate) in total for a two-year deposit. Determine the equivalent discount rate for the following periods: a. Six months b. One year c. One month (Note: Be careful not to round any intermediate steps less than six decimal places.) a. Six months The equivalent discount rate for a period length of six months is %. (Round to two decimal places.) b. One year The equivalent discount rate for a period length of one year is c. One month The equivalent discount rate for a period length of one month is %. (Round to three decimal places.) (Round to two decimal places.)
Your bank is offering you an account that will pay 20% interest (an effective two-year rate) in total for a two-year deposit. Determine the equivalent discount rate for the following periods: a. Six months b. One year c. One month (Note: Be careful not to round any intermediate steps less than six decimal places.) a. Six months The equivalent discount rate for a period length of six months is %. (Round to two decimal places.) b. One year The equivalent discount rate for a period length of one year is c. One month The equivalent discount rate for a period length of one month is %. (Round to three decimal places.) (Round to two decimal places.)
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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Transcribed Image Text:Your bank is offering you an account that will pay 20% interest (an effective two-year rate) in total for a two-year deposit. Determine the equivalent discount rate for the following periods:
a. Six months
b. One year
c. One month
(Note: Be careful not to round any intermediate steps less than six decimal places.)
a. Six months
The equivalent discount rate for a period length of six months is %. (Round to two decimal places.)
b. One year
The equivalent discount rate for a period length of one year is %. (Round to two decimal places.)
c. One month
The equivalent discount rate for a period length of one month is %. (Round to three decimal places.)
C
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