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Bank B pays 5.9% annual percentage rate compound semiannually what is the effective annual yield round to the nearest hundredth

Sagot :

sqdancefan

9514 1404 393

Answer:

  5.99%

Step-by-step explanation:

The relationship between the effective annual yield (e) and the nominal annual interest rate (r) compounded n times per year is ...

  e = (1 +r/n)^n -1

For r = 5.9% and n = 2, the effective rate is ...

  e = (1 +0.059/2)^2 -1 = 0.059870 ≈ 5.99%

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