Question

In: Finance

Can I get it solved step by step please with work shown You purchased a security...

Can I get it solved step by step please with work shown

You purchased a security on 10/30/2018 at a price of $93.45. You redeemed the security on 03/27/ 2019 at a price of $99.75. Answer the following questions:

  1. Find APR
  2. Find EAR

Solutions

Expert Solution

APR is 16.51% and

EAR is 17.32%.

Number of days between 10/30/2018 to 03/27/2019
Days
October 2018 2
November 2018 30
December 2018 31
January 2019 31
February 2019 28
March 2019 27
Total 149
Return for the holding period = (Redemption price - Cost )/Cost
= (99.75-93.45)/93.45
= 0.067416
APR = Holding period return *days in the year/holding period days
(Annual percentage of return) = 0.067416 *365/149
= 0.165146
So, APR is 16.51%
EAR = ((1+i/n)^n)-1 i APR
(Effective annual return) = ((1+0.1651/(365/149))^(365/149))-1 n number of times compounding in the year
= 0.173246
So, EAR is 17.32%

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