Security National Bank is quoting 1year certificates of depo

Security National Bank is quoting 1-year certificates of deposit with an interest rate of 10% compounded semiannually. Joe Saver purchased a $5,200 CD.

What is the CD

Solution

Hi,

Please find the detailed answer as follows:

Effective Rate = (1+Annual Rate/2)^2 -1 = (1+10%/2)^2 - 1 = $10.25%

Answer is 10.25%

Thanks.