Asked by Kolya Ptashenko on Jun 02, 2024
Verified
A trust company pays 5.375% compounded annually on its 5-year GICs. What semiannually compounded nominal interest rate would provide the same maturity value?
GICs
Guaranteed Investment Certificates, a type of Canadian investment that offers a guaranteed rate of return over a fixed period of time.
Compounded Annually
Interest on an investment calculated once a year, taking into account both the initial principal and the interest from previous periods.
Maturity Value
The amount payable to an investor at the end of a bond's term or at the time of maturity, including both the principal and interest.
- Calculate equivalent interest rates for varied compounding periods.
Verified Answer
ZK
Learning Objectives
- Calculate equivalent interest rates for varied compounding periods.