Consider a $100 investment paying 3.5% compounded daily, what is the equivalent quarterly rate ? 0.8750%...

Consider a $100 investment paying 3.5% compounded daily, what is the equivalent quarterly rate ?

0.8750%

0.8776%

0.0095%

none of the above

0.8788%

Solutions

Expert Solution

Considering a 360 day year, daily interest rate would be = 3.5/360 = 0.009722%

To find quarterly rate

Quarterly rate will be, daily rate compounded 90 times ( since 90 days are there in a quarter)

Quarterly rate = (1+ 0.00009722)^90 - 1

= 1.0087879641 - 1

=0.008788

=0.8788%

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Consider a $100 investment paying an EAR of 3.72%, what is the equivalent APR compunded monthly...

Consider a $100 investment paying an EAR of 3.72%, what is the equivalent APR compunded monthly ? none of the above 3.48% 3.78% 3.66% 3.50%

Which of the following APRs compounded monthly is equivalent to an APR of 14.15% compounded quarterly...

Which of the following APRs compounded monthly is equivalent to an APR of 14.15% compounded quarterly using 360-day calendar years, 30-day months, and 3-month quarters? a) 12.960% b) 13.320% c) 13.680% d) 14.040% e) 14.400%

What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded...

What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded daily?

trinity hs invested $8,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly...

trinity hs invested $8,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly for a term of eight years. 1. find the interest rate per conversion interval. 2. find the future value of the investment at the end of eight years. 3. find the total interest earned over the eight years. 4. set up the expression for finding an effective annual rate of 4.28% compounded quarterly and evaluate the expression.

Sarah has invested $7,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly...

Sarah has invested $7,800 in a savings certificate paying a guaranteed rate of 4.28% compounded quarterly for a term of eight years. Note this is a single payment. a. Find the interest rate per conversion interval. b. Find the future value of the investment at the end of eight years. . c. Find the total interest earned over the eight years. d. Set up the expression for finding the effective annual rate (EAR) of 4.28% compounded quarterly and evaluate the...

a) What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly?...

a) What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded daily? b) Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return of 9% in the future. If she follows your advice, how much...

) What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly?...

) What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded daily? b) Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return of 9% in the future. If she follows your advice, how much...

Question