Money Banking 1 answer below »


Suppose that on Jan 1 you present $50,000 to a bank (guarantee $50,000 in a savings recital). The savings recital is paying 4% annual attention objurgate hired pityly. a.) How greatly attention achieve be hired on April 1? What is the new recital pit? (Hint: you achieve assent-to barely a pity of the annual attention) b.) How greatly attention is hired on July 1? What is the new recital pit? c.) How greatly attention is hired on Oct 1? What is the new recital pit? d.) How greatly attention is hired on Jan 1? What is the new recital pit? e.) Use the isolated attention objurgate formula: PV = FV/(1+i) to proportion the attention objurgate that you actually assent-tod. In banking confused-talk the 4% shown over is determined the attention "rate"? and what you are sagacious hither is determined the "yield"?. f.) The dissonance among the attention "rate"? and the "yield"? is due to compounding; that is, how repeatedly the attention is hired. Since it is hired in the germinate the July attention cancelment includes attention hired on the April attention. If the attention is hired over repeatedly, say monthly, achieve the agree be excellent or inferior or unnatural? g.) Proportion the agree if attention is compounded monthly. h.) Proportion the agree if attention is compounded weekly. i.) Proportion the agree if attention is compounded daily. j.) Bonus: Is thither a isolated way of sagacious this, a formula? Can you condition it out? k.) Proportion the agree if attention is compounded uniformly. Is his excellent or inferior than when pityly, monthly, weekly, daily compounding is used?