What was the equivalent annual rate

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Reference no: EM131949258

1. You are scheduled to receive $4,500 at the end of each quarter over the next 3 years. If the annual interest rate is 10%, with quarterly compounding, what is the present value of this stream of cash flows? (to the nearest dollar)

a. $96,229

b. $47,314

c. $68,132

d. $46,160

2. The possibility that a bond issuer will not pay back the investor in a timely manner is the essence of:

a. interest rate risk.

b. default risk.

c. exchange rate risk.

d. inflation risk.

3. A bank paid a stated annual interest rate of 12%, with monthly compounding. What was the equivalent (or "effective") annual rate?

a. 14.40%

b. 12.68%

c. 12.75%

d. 6.25%

Reference no: EM131949258

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