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1.2 You decide to invest $1,000,000, in a pool of stocks and bonds. Your broker says that you will get nominal rate of 12% per year, compounded two times a year. a) Calculate the periodic rate and the effective annual rate. [4 points]

Respuesta :

Answer:

a) 12.36% b) $3,207, 135.47

Here's the b question

how much money will accumulate in the account at the end of 10 years

Explanation:

a)periodic rate= nominal rate / number of periods in a year

= 12%/2 = 6%

effective annual rate

= ( 1+ 0.5)²= (1 + 0.06)² = 0.1236 = 12.36%(0.1236 x 100)

b) value at year end

invested value ( 1+ interest effective)ˣ

= 1000000( 1+ 0.1236)¹⁰

= $3,207,135.47

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