a. You want to invest $20,000 and are looking for safe investment options. Your bank is...

a. You want to invest $20,000 and are looking for safe investment options. Your bank is offering a certificate of deposit that pays a nominal rate of 8.00% that is compounded quarterly. Your effective rate of return on this investment is .?

b.Suppose you decide to deposit $20,000 into a savings account that pays a nominal rate of 10.40%, but interest is compounded daily. Based on a 365-day year, how much would you have in your account after 12 months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)

Expert Solution

rate positively ..

Ans a)
	Effective rate of interst =	8.24%
	(1+8%/4)^4-1

	Ans =		8.24%

Ans b)	Future value =	$ 22,191.68
	20000*(1+10.4%/365)^365

	Ans =		$ 22,191.68

jeff jeffy answered 2 years ago

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