Asked by nivetha duraisamy on Jun 17, 2024
Verified
On a $10,000 principal investment, a bank offered simple interest rates of 1.45% on 270- to 364-day GIC's and 1.15% on 180- to 269-day GICs. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICs? (Assume that the interest rate on 180- to 269-day GICs will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)
Principal Investment
The original amount of money invested or loaned, on which basis interest and returns are calculated.
GIC
Stands for Guaranteed Investment Certificate, a secure investment that promises to return your principal plus interest.
- Investigate the effect of interest rates on the end value upon maturity of assorted financial tools such as Guaranteed Investment Certificates, T-Bills, and savings accounts.
- Appraise various investment options by evaluating their simple interest rates and possible returns.
Verified Answer
IM
Learning Objectives
- Investigate the effect of interest rates on the end value upon maturity of assorted financial tools such as Guaranteed Investment Certificates, T-Bills, and savings accounts.
- Appraise various investment options by evaluating their simple interest rates and possible returns.