Five banks offer nominal rates of 8% on deposits, but A pays interest annually, B...
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Five banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D ays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $3,500 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A ? Round your answers to two decimal places
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