You have a savings account in which you leave the funds for one year without adding or withdrawing from the account. What would you rather have: a daily compounded rate of 0.045%, a weekly compounded rate of 0.305%, a monthly compounded rate of 1.35%, a quarterly compounded rate of 4.15%, a semi-annually compounded rate of 8.5%, or an annually compounded rate of 17%?
Answer to relevant QuestionsWhat is the effective annual rate of a mortgage rate that is advertised at 7.75% (APR) over the next twenty years and paid with monthly payments?We return to Denise, our hopeful millionaire from Chapter 4 (Example 4.3) and this chapter (Example 5.2). In Chapter 4, Denise was putting away $5,000 per year at the end of each year at 6% interest, with the expectation ...The Minister of Finance for the State of Tranquility has just estimated the expected inflation rate for the coming year at 6.75%. If the real rate for the coming year is 3%, what should the nominal interest rates at the ...1. Povero believes that interest rates are a major factor in the real estate market. What are the implications of rising, falling, and steady interest rates for future real estate prices?2. If the risk-free interest rate is ...Why are some bonds sold with a premium, some at par value, and some at a discount?
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