On the first of the year, James invested x dollars at Proudstar bank in an account that yields 2% in interest every quarter year. At the end of the year, during which he made no additional deposits or withdrawals, he had y dollars in the account. If James had invested the same amount in an account which pays interest on a yearly basis, what must the interest rate be for James to have y dollars at the end of the year? Choose the correct choice from the following choices.
A) 2.04%  B) 6.12%  C) 8%  D) 8.25%  E) 10%
Per quarter, interest = 2%   So for a year, interest = 8%   8.25%ue to quarter cumulation, effective yield (YTM) would be slight higher than 8%   Answer = 8.25% =ANSWER:8.25%
<result>D</result>
On the first of the year, James invested x dollars at Proudstar bank in an account that yields 2% in interest every quarter year. At the end of the year, during which he made no additional deposits or withdrawals, he had y dollars in the account. If James had invested the same amount in an account which pays interest on a yearly basis, what must the interest rate be for James to have y dollars at the end of the year?