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10:57 B Z C . READ ONLY - This is an older file forma... 4. You are considering two different GICs or Guaranteed Investment Certificates.
10:57 B Z C . READ ONLY - This is an older file forma... 4. You are considering two different GICs or Guaranteed Investment Certificates. GIC A pays 2% in year 1, 3% in year 2 and 3% in year 3. GIC B pays 1.5% in year 1, 2% in year 2 and 3.8% in year 3 . a. Which should you choose? Why? b. GIC A is equivalent to what constant rate of interest paid in each of the 3 years? c. GIC B is equivalent to what constant rate of interest paid in each of the 3 years? 5. Bank of BC pays 5% simple interest on savings deposits. Bank of SK wants to be competitive, but plans on paying compound interest. What rate of compound interest would be just sufficient so that savers planning to invest for 10 years would be indifferent between the two banks? 6. You own a bond that pays no periodic interest, but will pay you $675 in ten years. a. If you sell this bond for $250, today, what return will the purchaser be earning? O
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