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I need the answer of i, ii and iii thx (i) Suppose that Bank A offers you a deposit account of interest at 16% per
I need the answer of i, ii and iii thx
(i) Suppose that Bank A offers you a deposit account of interest at 16% per annum, interest is compounded and payable quarterly. In competing for the deposit, Bank B offers you interest at 14.4% p.a., but compounded and payable monthly and Bank C offers you interest at 14% p.a., compounded and payable half-yearly. Calculate the effective annual rate (EAR) of each Bank for 1-year deposit. (9 marks) (ii) Based on your calculations at (i), advise which bank you should make the deposit? Explain. Assuming all other terms remain unchanged, which bank should you borrow money from? Explain. ( 6 marks) (iii) Last year, you earned a rate of return of 12.37% on your bond investments. During that time, the inflation rate was 3.6%. What was your real rate of returnStep by Step Solution
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