Question
Yourbankpays0.1%interestperweek.WhatistheAnnualPercentageRate(APR)?(expressyouranswerasapercentandroundtotwodecimalplaces,i.e.ifyouthinktheansweris1.942%,enter1.94) Your bank pays0.1%interest per week.What is the Effective Annual Rate(EAR)?(express your answer as a percent and round to two decimal places, i.e. if you
Yourbankpays0.1%interestperweek.WhatistheAnnualPercentageRate(APR)?(expressyouranswerasapercentandroundtotwodecimalplaces,i.e.ifyouthinktheansweris1.942%,enter"1.94")
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Your bank pays0.1%interest per week.What is the Effective Annual Rate(EAR)?(express your answer as a percent and round to two decimal places, i.e. if you think the answer is 1.942%, enter "1.94")
Youareshoppingforasavingsaccount.BankAoffersa12%APRwithmonthlycompounding.Ifyoudeposit$1,000today(andmakenootherdepositsorwithdrawals),howmuchmoneywillbeinyouraccountinoneyear?(roundyouranswertothenearestpenny)
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Continuing the previous question, supposeBank B offers 11.95% APR compounded daily (assume 365 days per year). Ifyou invest $1,000 today, in which bank will you end up with more money at the end of one year?
Endupwithabout$0.10moreinBankA
Endupwithabout$0.50moreinBankA
Endupwithabout$0.10moreinBankB
Endupwithabout$0.50moreinBankB
Whatisthevalueofanannuitythatpaysthreeannualpaymentsof$500attheendofeachofthenextthreeyearsiftheinterestrateis7.2%,statedasanAPRwithmonthlycompounding?(roundyouranswertothenearestdollar)
Youjusttookouta30-year$500,000mortgagetobuyyourdreamhome.Thebankoffereda3%APR(monthlycompounding).Whatisyourmonthlymortgagepayment?(roundyouranswertothenearestdollar)
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Continuing thepreviousexample,supposeyoutookonthemortgage described inparta.What will be the principal balance after one year?(round your answer to the nearest dollar)
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Continuing thepreviousquestion,How much total interest will you pay over the first year? (round your answer to the nearest dollar)
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You observe the following data on the current yield curve:1yr: 2.0%; 2 yr: 2.5%; 5 yr: 3.0%; 10-yr: 4.0%What expectations do investors likely have about future interest rates?
a. Interest rates might decrease in the future
b. Interest rates might rise in the future
c. Interest rates will stay about the same
d. Not enoughinformation
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Suppose the current one-year interest rate is5%and you expect the one-year rate to fall to4%next year and fall further to1%the following year.What three-year interest rate today would be consistent with these expectations?(express your answer as a percentage and round to one decimal place,i.e.ifyou thinktheanswer is5.1%,enter"5.1")
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