You Have Some Money on Deposit in a Bank Account

question 94

Multiple Choice

You have some money on deposit in a bank account which pays a simple (or quoted) rate of 8.0944 percent, but with interest compounded daily (using a 365-day year) .Your friend owns a security which calls for the payment of R10,000 after 27 months.The security is just as safe as your bank deposit, and your friend offers to sell it to you for R8,000.If you buy the security, by how much will the effective annual rate of return on your investment change?

• A) 1.87%
• B) 1.53%
• C) 2.00%
• D) 0.96%
• E) 0.44%

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Definitions:

Reverse Order

A method or process that involves performing operations, sequences, or activities in the opposite direction from the usual or established arrangement.

Priority Rule

A principle or guideline used to determine the order in which tasks, projects, or customers are addressed based on their importance or urgency.

Service Systems

Configurations of technology, processes, people, and other resources that provide services to customers.

Process-Oriented Facilities

Facilities designed to manage and improve the processes involved in production or service delivery, focusing on workflow and efficiency.