Answered
Suppose that the current rates on 60 and 120-day GICs are 1.50% and 1.75% simple interest, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then reinvesting its maturity value in a second 60-day GIC. What would the interest rate on 60-day GICs have to be 60 days from now for the investor to end up in the same financial position with either alternative?
On May 14, 2024