Suppose that the current rates on 60- and 120-day GICs are 1.50% and 1.75%, respectively. An investor
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Suppose that the current rates on 60- and 120-day GICs are 1.50% and 1.75%, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then reinvesting its maturity value in a second 60-day GIC. What would the interest rate on 60-day GICs have to be 60 days from now for the investor to end up in the same financial position with either alternative?
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Related Book For
Fundamentals Of Business Mathematics In Canada
ISBN: 9781259370151
3rd Edition
Authors: F. Ernest Jerome, Jackie Shemko
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