In: Finance
A bank offers 9.00% on savings accounts. What is the effective annual rate if interest is compounded daily?
Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))
A bank offers 9.00% on savings accounts. What is the effective annual rate if interest is compounded continuously?
Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))
Assume a bank offers an effective annual rate of 6.70%. If compounding is quarterly what is the APR?
Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))
Assume a bank offers an effective annual rate of 7.39%. If compounding is monthly what is the APR?
Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))
a.EAR=[(1+APR/m)^m]-1
where m=compounding periods
=[(1+0.09/365)^365]-1
=9.4162%(Approx)
b.EAR=(e)^APR-1
where e=2.71828
=[(2.71828)^0.09]-1
=9.4174%(Approx)
c.EAR=[(1+APR/m)^m]-1
where m=compounding periods
0.067=[(1+APR/4)^4]-1
(1+0.067)=[(1+APR/4)^4]
APR=[(1+0.067)^(1/4)-1]*4
=6.538%(Approx)
d.EAR=[(1+APR/m)^m]-1
where m=compounding periods
0.0739=[(1+APR/12)^12]-1
(1+0.0739)=[(1+APR/12)^12]
APR=[(1+0.0739)^(1/12)-1]*12
=7.1509%(Approx)