text: # compounded interest
  
  posted by on .
  
  A bank offers a rate of 5.3% compounded semi-annually on its four year GICs(Guaranteed Investment Certificates). What monthly and annually compounded rates should it quote in order to have the same effective interest rate at all three nominal rates?
  
  • compounded interest - ,
  
  5.3% annual rate compounded semi-annually is the same as
  (1+.053/2)²
  =1.05370
  =5.370% compounded annually
  
  compounded monthly (6 times for semi-annual),
  (1+.053/2) = (1+r)^6
  r=((1.0265)(1/6)-1)*6
  =5.242409%
  
  • compounded interest - ,
  
  \$10,000 deposited into savings account day Katie was born 18th birthday 6.5% compounded monthly how much in the account on 18th birthday
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