SOLUTION: Determine the effective annual yield for $1 invested for 1 year at 10.5% compounded quarterly a. 0.92% b. 10.92% c.5.32% d. 20.92%

Question 1120449: Determine the effective annual yield for $1 invested for 1 year at 10.5% compounded quarterly
a. 0.92%
b. 10.92%
c.5.32%
d. 20.92%
Answer by greenestamps(13200) (Show Source): You can put this solution on YOUR website!

As a multiple choice question, this problem is trivial. The answer has to be something very slightly larger than 10.5%; only answer b is anywhere close....

Formally....

So the yield is 1.1092-1 = 0.1092 = 10.92%.
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