Your grandmother asks for your help in choosing a certificate of deposit(CD) from a bank with aone-year

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Your grandmother asks for your help in choosing a certificate of deposit(CD) from a bank with aone-year maturity and a fixed interest rate. The first certificate ofdeposit, CD#1, pays 4.95 percent APR compounded annually, while the second certificate ofdeposit, CD#2, pays 5.00 percent APR compounded semiannually. What is the effective annual rate(the EAR) of eachCD, and which CD do you recommend to yourgrandmother?

If the first certificate ofdeposit, CD#1, pays 4.95 percent APR compounded annually, the EAR for the deposit is %. (Round to two decimalplaces.)

Posted Date: May 18, 2024 03:15 PM

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Your grandmother asks for your help in choosing a certificate of deposit(CD) from a bank with aone-year

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