Explanation Given: The CD hit a historical high in 1981, when the average rate was 16.7 % . Formula used: The formula to calculate the annual yield is given by, F V ( simple interest ) = F V ( compound interest ) P ( 1 + r t ) = P ( 1 + i ) n Here, P is the principle, i is the periodic rate, n and t are the annual yield for one year and r is the annual yield. Calculation: Calculate the periodic rate compounded daily. i = 16.7 ⋅ ( 1 365 ) % = 0 To determine (b) To find: The yield of a $ 10 , 000 two-year CD with interest compounded daily: To determine (c) To find: The yield of a $ 10 , 000 two-year CD with interest compounded daily:

8th Edition

ISBN: 9781305104174

Author: David B. Johnson, Thomas A. Mowry

Publisher: Cengage Learning

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Question

Chapter 5.2, Problem 50E

To determine

(a)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

To determine

(b)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

To determine

(c)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

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Chapter 5.2, Problem 49E

Chapter 5.2, Problem 51E

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Chapter 5 Solutions

Mathematics: A Practical Odyssey

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(a) To find: The yield of a $ 10 , 000 two-year CD with interest compounded daily:

Solution Summary: The author calculates the yield of a 10,000 two-year CD with interest compounded daily.

(a)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

(b)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

(c)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

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Chapter 5 Solutions

(a) To find: The yield of a $ 10 , 000 two-year CD with interest compounded daily:

Solution Summary: The author calculates the yield of a 10,000 two-year CD with interest compounded daily.

(a) To find: The yield of a $10,000 two-year CD with interest compounded daily:

(b) To find: The yield of a $10,000 two-year CD with interest compounded daily:

(c) To find: The yield of a $10,000 two-year CD with interest compounded daily:

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Chapter 5 Solutions

(a)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

(b)

To find:

The yield of a $10,000 two-year CD with interest compounded daily:

(c)

To find:

The yield of a $10,000 two-year CD with interest compounded daily: