A Bank Advertises That Currently a CD Pays 6

question 32

Short Answer

A bank advertises that currently a CD pays 6 % APR compounded daily (use 365 days a year). What is the effective yield on this CD, to the nearest hundredth?

---

Definitions:

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have full control.

Fair Value Method

The fair value method is an accounting approach that measures assets and liabilities at estimates of their current market value rather than historical cost.

Historical Cost Method

An accounting technique that values an asset at its original purchase price, without adjustments for inflation or market value changes.

Cost with Amortization Method

The spreading of the cost of an intangible asset over its useful life, affecting financial statements through periodic charges.