QUESTIONS

Consider a $1-$year, $$10,000CD.$

a$.$ What is its value at maturity $($future value$)$ if it pays $10$ percent $($annual$)$ interest?

b$.$ What would be the future value if the CD pays $5$ percent? If it pays $15$ percent?

c$.$ The First National Bank of San Francisco offers CDs with $10$ percent nominal $($stated$)$ interest rate but compounded semiannually. What is the effective annual rate on such a CD$?$ What would its future value be$?$

d$.$ Pacific Trust offers $10$ percent CDs with daily compotnding. What are such a CD$\text{'}$s effective annual rate and its value at maturity?

e$.$ What nominal rate would the First National Bank have to offer to make its semiannval compounding CD competitive with Pacific's daily$-$compounding CD$?$