Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kellie has $ 9 , 0 0 0 to invest. A local bank offers a 3 0 - month CD with an APR of 3

Kellie has $9,000 to invest. A local bank offers a 30-month CD with an APR of 3.8% compounded monthly. What is the APY? (Round your answer to three decimal places.)%
Mariah has $12,000 to invest. A local bank offers a 24-month CD with an APR of 3.8% compounded monthly. What is the APY? (Round your answer to three decimal places.)%
Compare the APY results. Which of the following statements is true?
Kellie's CD has a higher APY because her money is invested for a longer period of time than Mariah's.
Mariah's CD has a higher APY because the amount of money she is investing is greater than Kellie's.
Their CDs have the same APY because they have the same number of compoundings per year and the same APR. The amount invested and the time period of the investment don't matter because they aren't part of the APY formula.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mathematics Of Finance

Authors: Robert Brown, Petr Zima

2nd Edition

0071756051, 9780071756051

More Books

Students also viewed these Finance questions

Question

In what ways do personal and social media change how we think?

Answered: 1 week ago

Question

How do virtual communities diff er from physical communities?

Answered: 1 week ago