Asked by Stephen Sieczkowski on Jun 02, 2024
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A P32 series of compound-interest Canada Premium Bonds guaranteed interest rates of 2.5%, 3%, 3.5%, 4.25%, and 5% in the first five successive years. The Step-Up version of compound-interest Series 2003 Ontario Savings Bonds was issued at about the same time with interest rates of 2.75%, 3.25%, 3.5%, 4%, and 4.25% in the first five successive years. For a $10,000 investment, which savings bonds will have the greater maturity value after five years? How much greater?
Maturity Value
The amount payable to an investor at the end of a fixed term investment.
Compound-Interest
Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.
Guaranteed Interest Rates
Interest rates promised to remain constant over a defined period, often associated with savings instruments like fixed deposits.
- Determine the future value and earned interest on a range of investment options, including GICs, strip bonds, and savings bonds.
- Employ mathematical models to assess returns on investment and scrutinize financial options.
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Learning Objectives
- Determine the future value and earned interest on a range of investment options, including GICs, strip bonds, and savings bonds.
- Employ mathematical models to assess returns on investment and scrutinize financial options.
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