You have recently been given an opportunity to lock-in a 1% monthly interest rate on a...

You have recently been given an opportunity to lock-in a 1% monthly interest rate on a savings account. Which of the following options will yield you the highest amount of interest on your 1% interest payments after 12 months?

A) Accumulate 1% a month as an annual percentage rate

B) Accumulate 1% a month as an annual percentage appreciation

C) Accumulate 1% a month as an annual percentage yield

D) Accumulate 1% a month as an annual percentage growth

Solutions

Expert Solution

A) Accumulate 1% a month as an annual percentage rate

The effective rate will be highest in this case

( 1+ 1%)^12 -1

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You expect interest rates to continue to rise and you want to lock in the rate...

You expect interest rates to continue to rise and you want to lock in the rate you'll pay on a $50 million short-term loan you plan to take out at the beginning of the third quarter. You take a short position on the June Eurodollar contract, which settled at 97.775 today. Assume on June 18, when the contract expires, it settles at 97.545. Two weeks later you borrow the $50 million at the three-month LIBOR rate, which is at 2.468%....

You are given: (i.) Fund A accumulates at a nominal interest rate of 9% convertible monthly....

You are given: (i.) Fund A accumulates at a nominal interest rate of 9% convertible monthly. (ii.) Fund B accumulates at a nominal discount rate of 12% convertible semi-annually. (iii.) At the end of 5 years, the total amount in the two funds is 1000. (iv.) At the end of 2 years, the amount in Fund A equals the amount in Fund B. Let X be the initial amount in Fund A and Y the initial amount in Fund B....

You have been given the task to evaluate a market opportunity for a firm. Give specific...

You have been given the task to evaluate a market opportunity for a firm. Give specific examples of the dimensions you would use to determine the attractiveness of a given market. (Strategic Marketing)

In February, a company wants to lock in the interest rate that will be earned for...

In February, a company wants to lock in the interest rate that will be earned for three months on a $9 million deposit to be made after seven months in September. The company decides to trade in Eurodollar futures and the September Eurodollar futures price is 98.50. Assume that in September the company closes out its position in the futures market when the LIBOR is 2.0% per annum and the futures price is 98.00. Assuming that the correct number of...

You have been given the opportunity to purchase a $100 Transocean, Inc. corporate bond for $96.24....

You have been given the opportunity to purchase a $100 Transocean, Inc. corporate bond for $96.24. The bond was issued on 10/1/2001 and matures on 10/1/2031. It has a coupon rate of 7.5% per year and coupons are paid twice a year. If your MARR for bonds of this grade (Moody’s rating = Caa1) is 8.8% per year (nominal) should you purchase the bond today? You must draw a correct cash flow diagram to get full credit for this problem.

You have been given the opportunity to purchase a $100 Transocean, Inc. corporate bond for $96.24....

You have been given the opportunity to purchase a $100 Transocean, Inc. corporate bond for $96.24. The bond was issued on 10/1/2001 and matures on 10/1/2031. It has a coupon rate of 7.5% per year and coupons are paid twice a year. If your MARR for bonds of this grade (Moody’s rating = Caa1) is 8.8% per year (nominal) should you purchase the bond today at this price?. You must draw a correct cash flow diagram to get full credit...

Assume that you have recently been given the firm, A. Sedeno, as a gift from 1st...

Assume that you have recently been given the firm, A. Sedeno, as a gift from 1st January, 2020. You are required to create a new retail merchandise company. Use the information below to assist you in preparing a proper financial accounting report after the first month of operations. 1. Open all accounts in the appropriate Ledgers. 2. Balance all accounts and extract a Trial Balance. R. Sedeno had the following assets and liabilities on 31st December, 2019. Items $ Items ...

a) Given effective quarterly interest rate equal to 3.25%, findthe equivalent monthly interest rate.Ans:...

a) Given effective quarterly interest rate equal to 3.25%, find the equivalent monthly interest rate.Ans: 1.078%. Show all work.b)Given effective annual discount rate equal to 9.2%, find the nominal interest rate compounded quarterly.

1. A rise in the real rate of interest ________ the opportunity cost of holding an...

1. A rise in the real rate of interest ________ the opportunity cost of holding an inventory of a given size, and therefore ________ desired investment expenditure. Select one: a. decreases; decreases b. decreases; leaves unaffected c. increases; decreases d. decreases; increases e. increases; increases 2. If nominal national income increased by 20% over a certain period of time while real national income increased by 10%, then Select one: a. everybody in the economy became worse off. b. inflation has...

You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is...

You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is 16 percent. How much will you pay over the course of the loan? With four years left on the loan, how much will you still owe? Excel

Subjects