Which of the following investments has the highest effective annual interest rate (EAR)? a. A bank CD

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Which of the following investments has the highest effective annual interest rate (EAR)?

a. A bank CD that pays 8.25 percent compounded quarterly.

b. A bank CD that pays 8.25 percent compounded monthly.

c. A bank CD that pays 8.45 percent compounded annually.

d. A bank CD that pays 8.25 percent compounded semiannually.

e. A bank CD that pays 8 percent compounded daily (on a 365-day basis).

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Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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Question Posted: Jun 08, 2012 01:28 AM

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Which of the following investments has the highest effective annual interest rate (EAR)? a. A bank CD

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a Interest rate on CD i 825 Frequency of compounding m 4 ...View the full answer

Fundamentals of corporate finance

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