Question
Determine the effective annual yield (annual percentage yield) for $1
invested for 1 year at 8.5% compounded monthly.
invested for 1 year at 8.5% compounded monthly.
Answers
let that rate be i
(1+i)^1 = (1+.085/12)^12
1+i = 1.08839
i = .08839
so the effective annual rate is 8.839%
(1+i)^1 = (1+.085/12)^12
1+i = 1.08839
i = .08839
so the effective annual rate is 8.839%
Thanks a lot
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