You invested in a 3-month certificate of deposit at your bank. Your investment was $2,036, and at the end of the term you will receive $2,394 a. What is the holding period return (HPR) on your investment? (Round your answer to 2 decimal places.) HPR b. What is the annual percentage rate (APR)? (Round your answer to 2 decimal places.) APR c. What is the effective annual rate (EAR)? (Round your answer to 2 decimal places.) EAR
Expert Answer
Holding period return= (end value- initial value)/initial value *100
=(2394-2036)/2036*100
=17.58% PER 3 MONTHS
APR= 17.58%*4= 70.32% PER YEAR
EAR= ((1+0.70/4)raise to power 4)
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