a a https://www.nmathod.com/student PlayerTestaspx?testid-173600097 118 WW6 Spri

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a a https://www.nmathod.com/student PlayerTestaspx?testid-173600097 118 WW6 Spring 2018 iz: Chapter 8 Quiz 3 of 25 (7 is Question: 1 pt Determine the ofcatve anual yild tor ach investment Then select the better ivestment Assume 360 days in a year. 14% compounded monthly: 14 25% compounded annually The effective annual yield for a 14% compounded monthly investment is %. Round to two decimal places as needed) The effective annual yield for a 1425% compounded annually investment is1% Round to two decimal places as needed.) Choose the beter investment below 14 25% compounded annually 14% conmpounded monthly O Type here to seardh

Explanation / Answer

Effective Annual yield(Y)={1+(r/n)}^n}-1

A. 14% compounded monthly:

Y={1+(.14/12)^12}-1

={(1.0116666666)^12}-1

=(1.1493420)-1

=.1493420 or 14.93%

b. 14.25% compounded annually

Y={1+(.1425/1)^1}-1

={1.1425}-1

=.1425 or 14.25%

We select the one which have higher effective Annual yield. In this it is 14% compounded monthly which gave the effective Annual yield of 14.93%

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