Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The AVEX token has a price of $1,000 and pays interest of $0.000085 per token every 6 seconds. Compounded interest can only be eamed if

image text in transcribed
The AVEX token has a price of $1,000 and pays interest of $0.000085 per token every 6 seconds. Compounded interest can only be eamed if claimed and reinvested. If interest is not claimed $0.000085 will be accumulated every 6 seconds per $1.000. After being claimed, the accumulated amount is paid out instantaneously and reinvested in the token. Suppose an investor holding one AVEX token claims the interest only every 24 hours and reinvests interest payments into the AVAX token instantaneously after being claimed. How much would the investor have lost in interest proceeds if she claims the interest only every 24h instead of every 6 seconds over the first six months (181 days) of a new year. Hint: To solve the question, you need calculate the effective rate for 6 seconds and for 24 hours respectively. Then calculate effective semi-annual rate for both. Recall also the effect between continuous and discrete compounding. (Note: Please retain at least six decimal places in your calculations) O a. $ 0.0025 O b. $ 0.0085 O c. $ 8.5000 O d. $ 12.6723 e. $ 0.16905

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

Essentials Of Financial Management Text And Cases

Authors: George C Philippatos

1st Edition

0816267162, 978-0816267163

More Books

Students also viewed these Finance questions