Question

suppose a savings and loan pays a nominal rate of 2.3% on savings deposits. find the effective annual yield if interest is compounded daily. assume that the year is not a leap year.(round to the nearest thousandth as needed)

Answer 1

To find out how much is the effective annual yield we use the formula:

`(1+(r)/(n))^(nt)`

In this case r=0.023, n=365. Then:

`(1+(0.023)/(365))^(365t)=1.0001^(365t)`