Suppose That the Current Rates on 90-And 180-Day GICs Are

question 100

Short Answer

Suppose that the current rates on 90-and 180-day GICs are 3.25% and 3.50% simple interest, respectively. An investor is weighing the alternatives of purchasing a 180-day GIC versus purchasing a 90-day GIC and then reinvesting its maturity value in a second 90-day GIC. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative?

---

Definitions:

Labor Unions

Organizations formed by workers to protect their collective interests, rights, and working conditions.

Concessions

Compromises made by one party in negotiations, typically involving relinquishing certain demands to reach an agreement.

Rank And File

The ordinary members of an organization, especially a union, as compared to its leadership.

Union Members

Individuals who have joined a union to benefit from collective bargaining and other protections and support the union provides.