Question
1. An investor purchases 400 shares at $21.40 a share, holds the stock for 30 weeks, and then sells the stock for $24.60 a share.
1. An investor purchases 400 shares at $21.40 a share, holds the stock for 30 weeks, and then sells the stock for $24.60 a share. Use the commission schedule below from Company A to find the annual rate of interest earned by the investment.
Company A
Principal
Under $3,000
$3,000-$10,000
Over $10,000
Commission
$25 + 1.8% of principal
$37 + 1.4% of principal
$107 + 0.7% of principal
2. Find the annual percentage yield (APY) for money invested at an annual rate of (a) 3.05% compounded quarterly. (b) 2.95% compounded continuously. As an investor what is the preferable interest plan?
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