Two options of penalty for early withdrawal

Assignment Help Business Economics
Reference no: EM133129136

Certificates of deposit (CDs) are short- to medium-term investment instruments issued by banks which provides vides a fixed rate of interest for a period of time. CDs offer stability in interest earned but have penalty for early withdrawal. A 1 year CD pays a nominal rate of interest of 8% compounded quarterly. You are offered two options of penalty for early withdrawal:

(a) loss of 3 m3-monthonth interest;

(b) a reduction in the nominal rate of interest to 6%

If you wish to withdraw after 9 months, which option would you choose?

Reference no: EM133129136

Questions Cloud

Incremental marketing budget increase : Evelyn's current project is to forecast the next five year's revenue for her firm's consulting practice. Over the past three years, the firm has raised hourly p
New trends in medicated assisted treatment : What are some new trends in medicated assisted treatment among alcohol and opiates users?
Calculate the break-even number of ballet shoes : Dance Unlimited plans to sell 10,000 ballet shoes at $50 each in the coming year. Calculate the break-even number of ballet shoes
Implicit assumption that the growth of per capita income : In defining development to include more than just the growth of per capita income, there is an implicit assumption that the growth of per capita income alone is
Two options of penalty for early withdrawal : Certificates of deposit (CDs) are short- to medium-term investment instruments issued by banks which provides vides a fixed rate of interest for a period of tim
What is the monthly payment : Sam takes a 30-year mortgage loan of $200,000 at the rate of 6%, amortized with monthly payment. What is the monthly payment
What is the universality of management : What is the universality of management? Why is it important?
What is the outcome of negotiation : 1. A charcoal manufacturer (C) is located next to a fabric manufacturer (F). F produces fabric that is used to make white bed sheets, and as part of the process
What should be the retail price for each additional skirt : If the departmental MU% is 55%. If the skirts that were already bought are $64.00 each, what should be the retail price for each additional skirt

Reviews

Write a Review

Business Economics Questions & Answers

  Occupational distributions of men and women

Consider Claudia Goldin's findings in Chapter 3 of The Gender Gap.  Explain the changes between 1900 and 1970 in the occupational distributions of men and women for the major categories examined by Goldin.  Also describe the changes in the wage ra..

  What cause an increase in producer surplus

Among which of the following will cause an increase in producer surplus. Which of the following causes a shortage of a good.

  Relationship between consumers and gas station owners change

Studies have fixed the short run price elasticity of demand for gasoline at the pump at -.20. Suppose the international hostilities lead to a sudden cutoff of crude oil supplies. As a result, US supplies of refined gas drop 10 percent. How would the ..

  Average annual return for stock a

If the return on stock A in year 1 was 5 %, in year 2 was -4 %, in year 3 was 13 % and in year 4 was 1 %, what was the average annual return for stock A over th

  What would his contract be worth at the time he signs? it

A local newspaper headline? blared, "Bo Smith Signed for? $30 Million." A reading of the article revealed that on April? 1, 2014, Bo? Smith, the former? record-breaking running back from Football? University, signed a? $30 million package with the Da..

  All income in economy is either profit income or wage income

Firm C produces 1,000 pounds of cotton at a cost of 50 cents per pound. They sell all of the cotton to Firm S for 75 cents per pound. Firm S makes 1,000 t-shirts with the cotton for a total cost of $1.50 per t-shirt. They sell all of the shirts to Fi..

  Money supply in the economy expand in response

If every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan

  Importance of efficient forecasting demand for product

What is the importance of an efficient forecasting demand for a product and its relationship with economic gain?

  Eliminating poverty will pay for itself in reduced crime rat

According to the Green Party of Canada: “Eliminating poverty will pay for itself in reduced crime rates. Failure to eliminate poverty will cost our society far more than an effective program to make poverty history in Canada.”

  Free market price does not cause deadweight loss

Draw a supply and demand curve combination where the imposition of a maximum price that is below the free market price does not cause a deadweight loss. Explain in detail why there is no deadweight loss in your example.

  Calculate the income tax liability

Using the following tax bracket cutoffs (the cutoffs represent the top of that bracket) calculate the income tax liability for someone with $250,000 of taxable income. (taxable income means that all deductions and exemptions are already accounted for..

  What is the effect on east asia willingness to trade

What is the effect on East Asia's Willingness to trade? b. Assuming that each region is large enough to influence international prices, how do East Asia's good-growing seasons in food affect the equilibrium international price ratio?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd