What investment accumulates more interest

Assignment Help Financial Management
Reference no: EM13847918

What investment accumulates more interest--15% compounded semi annually, or 14% compounded daily?

a. The 15% option earns one percentage point more than the 14% option over a year

b. The 15% option accumulates more over a year--EAR of 15.5% vs. the 14% option, with an EAR of 15.0%

c. They accumulate the same amount over a year

d. The 14% option earns an EAR of 15% and is better than the 15% option with an EAR of 15.9%

Reference no: EM13847918

Questions Cloud

Annual discount rate appropriate : What is the present value of $1,500 received for 24 months in arrears, followed by $1,200 received for 36 months in arrears, if the annual discount rate appropriate is 9.25%?
What was the price of these bonds when they were issued : One year (2014) Alpha issued 10 year bond at par value. The coupon rate of these bonds is 7% and pay interest semi-annually. Today (2015) the interest rate on these bonds has decreased to 6.2% (the bonds currently have a YTM of 6.2%). 1. What was the..
The same time for the same security : A hedge fund company and I entered an order at the same time for the same security. At the same time later that day both of us sold the position. When calculating returns I had a slight gain while the hedge fund had a large loss. How could this be ex..
Evaluating cash flows with the npv method : The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions.
What investment accumulates more interest : What investment accumulates more interest--15% compounded semi annually, or 14% compounded daily?
Business concept-appropriate for sole proprietorship : What business concept would be appropriate for a sole proprietorship? A corporation? A limited liability company? If you were opening your dream business, what structure would you select? Why?
Amount of interest anthony has to pay over life of loan : Anthony is considering the purchase of used car. The price, including the title and taxes, is $9,530. Anthony is able to make a $2,530 down payment. The balance, $7,000, will be borrowed from the Credit Union at an interest rate of 9.25% compounded d..
Value of perpetuity making quarterly payments in arrears : What is the present value of a perpetuity making quarterly payments in arrears in the amount of $9,478 per quarter, and the appropriate annual rate of interest is 11.4%?
Value of the investment today if appropriate interest rate : if you have an investment that pays you $4000 two years from today,$5000 three years from today, and $6000 four years today. What is the value of the investment today if the appropriate interest rate 6% per year compounded annually?

Reviews

Write a Review

Financial Management Questions & Answers

  Role of consultant with ten years experience in public funds

You are in the role of a consultant with ten years experience in the public financial management industry. A group of 20 civic leaders are considering forming a new task force and have asked you to prepare a proposal on whether they should build a fa..

  Fund manager has a well-diversified portfolio

A fund manager has a well-diversified portfolio that mirrors the performance of the S&P 500 and is worth $510 million. The value of the S&P 500 is 1,700, and the portfolio manager would like to buy insurance against a reduction of more than 5% in the..

  MM extension with growth-what is value of equity

According to the MM extension with growth, what is Kitto's value of equity?

  Statements about internal rate of return

Which of the following statements about internal rate of return is true?

  Interested in diversifiable risk or non-diversifiable risk

Assume that most investors put together a well-diversified portfolio, and mangers manage in the interest of the well diversified shareholder. Should the manager be more interested in the diversifiable risk or non-diversifiable risk a project brings t..

  Define classes of shares with unequal rights

When comparing common stock of the same company it is fair to say that all shares, no matter how many classes, are all created with the same equal rights. companies sometimes have two different classes of shares with unequal rights to dividends an..

  Rate-based decision statistic measures the excess return

Which rate-based decision statistic measures the excess return–the amount above and beyond the cost of capital for a project, rather than the gross return?

  What coupon rae would bonds have to pay to be issued at par

Chapman has a coupon rate of 9.63 it maturity 01/01/2042 Last price was $95.09 Lasst yield is 10.15% ESt spread is 7.15 UST is 30 years Est Volume is 65,275. If Chapman wants to issue new 30 year bonds today, what coupon rae would the bonds have to p..

  What was the average annual rate of change in the price

20 years ago, the average home sale price in your hometown was $75,351. Today the average price is $244,329. What was the average annual rate of change in the price over this time period? Round the answer to two decimal places in percent form. Show w..

  Best estimate of the companys cost of equity

Stock in Dragula Industries has a beta of 1.4. The market risk premium is 7 percent, and T-bills are currently yielding 4.40 percent. The company’s most recent dividend was $1.60 per share, and dividends are expected to grow at a 6.0 percent annual r..

  Annual net patient revenues

Community Hospital has annual net patient revenues of $150 million. At the present time, payments received by the hospital are not deposited for six days on average. The hospital is exploring a lockbox arrangement that promises to cut the six days to..

  Convertible the callable bond

The Lion Corp.(LC) issues a 30 year callable bond which is also convertible to 50 shares of LC common stock. Explain why LC would issue a bond with these features as opposed to just issuing the bond without such options.  As a bondholder, would you n..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd