Question

Kramer invested $15,000 in a certificate of deposit for 1 year. The certificate earns

interest at an annual rate of 4.5% compounded daily. The amount per $1.00 is
1.046025. What is the effective annual yield?
4.6%
0 4.5%
5.4%
6.4%

Answer 1

Effective annual yield = (1+r/n)^n -1
Effective annual yield, but we already no the daily rate so we just subtract by 1 now.
1.046-1=0.046 or 4.6%
Which is the first option.