Question: A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 6.8% in early

A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 6.8% in early 2015. If that rate continues unchanged for the 3 years of the bond's duration, what is the APY (annual percentage yield) on a $10,000 bond? (Please answer in term of percentage, e.g: 2.5%, and round to 2 decimal places)

Step by Step Solution

★★★★★

3.40 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

? BestChip (BC) is a large nationwide corporation that produces low-fat snack products for an expanding market (pun intended). Basically, BC takes materials (corn, wheat, and potatoes) and turns them...

What are the three potential conflicts of interest that can take place during the auditing process? Explain.

The following table represents admission data of two programs for the given years: 2009/10 2010/11 2011/12 99 136 112 307 309 297 Computer Systems Technician Computer Systems Technology a) What...

Suppose that the riskfree rate of interest that can be earned is 2 (IR, 002), and the expected market return and volatility are given by RM 00875 and am 01711 Further, if a fund's risk appetite is...

You are observing the following market prices. A put option that expires in six months with an exercise price of $45 sells for $5.80. The stock is currently priced at $40, and the risk-free rate is...

A put option that expires in six months with an exercise price of $65 sells for $4.89. The stock is currently priced at $61, and the risk-free rate is 3.6 percent per year, compounded continuously....

A put option that expires in six months with an exercise price of $50 sells for $4.35. The stock is currently priced at $48, and the risk-free rate is 3.5 percent per year, compounded continuously....

A put option that expires in six months with an exercise price of $45 sells for $4.84. The stock is currently priced at $43, and the risk-free rate is 3.5 percent per year, compounded continuously....

Sulfuric acid can be prepared starting with the sulfide ore, cuprite (Cu 2 S). If each S atom in Cu 2 S leads to one molecule of H 2 SO 4 , what is the theoretical yield of H 2 SO 4 from 3.00 kg of...

PutCall Parity A put option that expires in six months with an exercise price of $65 sells for $4.89. The stock is currently priced at $61, and the risk-free rate is 3.6 percent per year, compounded...

PutCall Parity A put option that expires in six months with an exercise price of $50 sells for $4.89. The stock is currently priced at $53, and the risk-free rate is 3.6 percent per year, compounded...

You want to estimate the cost of equity of rm A using CAPM. Firm A has a beta of 1.3 and the standard deviation of returns is 17.81%. Assume that the return on the market portfolio is 8.52%, and the...

How did you EXPECT your uncut lane to look in the gel image? What ACTUALLY happened? What is a plausible explanation if there was any discrepancy? How did the observed BclI and EcoRI digest results...

Use the chain rule t o find d e l z d e l s and d e l z d e l t . z = a r c s i n ( x - y ) , x = s 2 + t 2 , y = 2 - 9 s t d e l z d e l s = d e l z d e l t =

2. An ebonite rod is rubbed with fur and is found to have a charge of -3.2 x 108 C on it. a) Calculate the number of electrons transferred. b) What is the charge on fur after rubbing?

17 22 Shape ABCDEFG is made from two squares and a right-angled triangle. AB = 15 cm and BC = 12 cm. B 12 12 15 E G (a) Find the length AG. Answer .cm [2] (b) Find the total area of the shape. Answer...

3. Calculate the mole fraction of benzene in solution containing 30% by mass in carbon tetrachloride.

13. A solution of glucose in water is labelled as 10% w/w, what would be the molality and mole fraction of each component in the solution? If the density of solution is 1.2g ml, then what shall be...

59. Water is filled in a tank as shown in figure. There is a hole from where liquid emerges with speed v. If air is blown over the tank, the speed v (a) will decrease (b) will increase (c) will...

13. Why do railroads require greater volumes of freight in order to be profitable? A. Rail carries are charged very high taxes compared to other modes B. Since railroads usually operate in one...

A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 2.7% in early 2015. If that rate continues unchanged for the 3 years of...

Question 3 Effective Rate and APY A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 1 . 8 % in early 2 0 1 5 . If that...

Question 3 Effective Rate and APY A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 4.5% in early 2015 . If that rate...

13. The definition of cross income in the tax isw is: a. At rems specificaly lidted at income in the tax law b. Al tash porments reccived for eoods provifed and senvices performed C. All income from...

Bond = 48,300$ Assuming the bond earns 1.99% annually, approximately how long will it take for the bond to reach its stated face value? How much will a $48,300 EE savings bond cost when you initially...

Test please open to see everything and answer in full please 4. Which of the following is a deduction for adjusted gross income in 2023 ? a. Personal casualty losses b. Medical expenses c. Student...