Bank accounts has the highest effective annual return

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Reference no: EM131924379

1. Which of the following bank accounts has the highest effective annual return?

a) An account that pays 8.00% nominal interest with annual compounding.

b) An account that pays 8.00% nominal interest with semi-annual compounding.

c) An account that pays 8.05% nominal interest with quarterly compounding.

d) An account that pays 8.05% nominal interest with monthly compounding.

2. ABC Corp's outstanding bonds have a $1,000 par value, and they mature in 5 years. Their yield-to-maturity is 9%, based on semi-annual compounding, and the current market price is $853.61. The bond's annual payment is $53. What is the bond's current yield?

a) 3.11%

b) 6.22%

c) 3.02%

d) 6.04%

Reference no: EM131924379

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