Question
PLEASE SHOW ALL WORK Suppose you have $1,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 2.0% annual interest, compounded daily.
PLEASE SHOW ALL WORK
Suppose you have $1,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 2.0% annual interest, compounded daily. How much will you have when the CD matures? (Hint: To incorporate the compounding effect, you need to convert the annual interest rate into the daily interest rate, and convert years into days to get correct answer).
Suppose the U.S. Treasury offers to sell you a bond for $800.00. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
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