What is the annualized interest rate of this investment

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Reference no: EM131234417

The annual interest rate from year t to year t + 1 is rt,t+1 = 5% + 0.3% . t (e.g., the rate of return from year 5 to year 6 is 5% + 0.3% . 5 = 6.5%).

(a) What is the holding rate of return of a 10-year investment today?

(b) What is the annualized interest rate of this investment?

Reference no: EM131234417

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