##### 1. Determining Effective Annual Yield. And 2 investing in a price compounded mon

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1.David Buckley won a writing contest and invested the \$10,000 cash prize in a 3-year CD paying 1.29% compound daily (use n=360).  What was the value of the CD after 3 years? 2.determine the effective annual yield for \$1 invested for 1 year at 4.75 c

Feb 22nd, 2015

10000*(1+0.0129/360)^(360*3) = 10394.58 = \$10,395

Effective annual yield is computed

(1+r) = (1.0475/360)^360=1.0486

r = 0.0486 = 4.86%

Feb 22nd, 2015

Sorry the 2 question cut off in the end this is the whole question Determining Effective Annual Yield.  Determine the effective annual yield for \$1 invested for 1 year at 4.75% compounded monthly.

The word month cut off can u help me with compound monthly?
Feb 22nd, 2015

Why not?

(1+r) = (1+0.0475/12)^12= 1.04854881   ;

r = 0.0485 or 4.85%

Feb 22nd, 2015

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Feb 22nd, 2015
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Feb 22nd, 2015
Dec 7th, 2016
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