What are the nominal-periodic and effective annual rate

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Reference no: EM131998102

1. An investor can invest money with a particular bank and earn a stated interest rate of 15.40% however, interest will be compounted quarterly. What arethe nominal, periodic, and effective annual rate for this investment?

Nominal Possible ansers. a) 4.58% b) 9.17% c)11.25% d)15.40%

Periodic Possible answers a)3.85%. b)16.31%, C) 4.58% d) 2.35%

Effective annual rate a)4.55% b) 16.31% c)3.66% d)4.35%

2. You want to invest $17,000 and are looking for a safe investment options. Your bank is offerng a certificate of deposit that pays a nominal rate of 14% that is coumpounded daily. What is the effective rate of return that you will earn from this investment?

a)15.207% b) 14.902% c)15.024% d) 14.930%

3. Suppose you decide to deposit $17,000 in a savings account that pays a nominal rate of 15%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after 12 months? (calculate # of days by dividing number of months by 12 and multiply by 365)

a) 20145.58 b) 19750.57 c)19553.06 d)20935.60

Reference no: EM131998102

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