Bank A is offering a 1-year CD at a nominal compound interest rate of 5.59% with...

Bank A is offering a 1-year CD at a nominal compound interest rate of 5.59% with an APY of 5.75%. Bank B is offering a 1-year CD at a nominal compound interest rate of 5.67% with an APY of 5.75%. Showing your computations, explain in some detail how each of these banks is evidently employing one of the standard compounding frequencies (semi-annually, quarterly, monthly, weekly, or daily) to legally advertise identical APY’s even though each bank uses a different nominal compound interest rate in computing the actual interest on its CD.

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jeff jeffy answered 1 year ago

Considering the choice between investing $50,000 in a conventional 1-year bank CD offering an interest rate...

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