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What is the approximate effective rate

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  1. All else equal, your wealth will grow faster if the interest rate is 10% and the compounding is. a) Daily b) Monthly c) Weekly d) Continuous
  2. What is the approximate effective rate if the nominal annual interest rate is 11% and is compounded quarterly?
  3. What is the PV of a 6-year annuity due whose payments grow at 2%, if the first payment is $3,000, the interest rate is 8% and it is annually compounded.?
  4. if the continuously compounded rate is 5%, what is the approximate FV of $2,500 in 9 years from today?
  5. Consider discount bond G and discount bond C. Both G and C have the same face value and the same maturity. Bond G is a treasury bond and bond C is a corporate bond. all else equal. a) Cannot tell. b) The present value of G is less than the present value of C. c) The present value of G is greater than the present value of C. d) The present value of G is the same as the present value of C.

Reference no: EM131908419

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