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
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%
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.
(1+r) = (1+0.0475/12)^12= 1.04854881 ;
r = 0.0485 or 4.85%
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