Payday loans are very short-term loans that charge very high interest rates. You can borrow $500 today and repay $590 in two weeks. What is the compounded annual rate implied by this 18 percent rate charged for only two weeks?
Answer to relevant QuestionsWhat’s the interest rate of a 7-year, annual $4,000 annuity with present value of $20,000? Consider that you are 45 years old and have just changed to a new job. You have $150,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also ...You have secured a loan from your bank for two years to build your home. The terms of the loan are that you will borrow $200,000 now and an additional $100,000 in one year. Interest of 10 percent APR will be charged on the ...How do FIs alleviate the problem of liquidity risk faced by investors wishing to invest in securities of corporations?Suppose we observe the following rates: 1R1 = 8 percent, 1R2 = 10 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, ...
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