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?

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Definitions:

Contribution Format

A type of income statement format that separates variable costs from fixed costs to highlight the contribution margin.

Break-even Point

The financial point at which total revenue exactly matches total costs; neither profit nor loss is realized.

Dollar Sales

The total revenue generated from the sale of goods or services, expressed in monetary units.

Contribution Margin Ratio

A financial indicator demonstrating the proportion of sales income that is not absorbed by variable expenses, hence aiding in the coverage of fixed costs.