Ask Question
BusinessBusiness
16 December, 16:16

your investment advisor informs you that you do not need to pay a fee for his services. Instead, he invests your money for one month and keeps all of the proceeds before investing it for you. If your advisor makes and keeps a 1% return on your investment, what is his EAR if the earnings rate could be extrapolated for one year?

+2
Answers (1)
  1. 16 December, 16:42
    0
    Answer: 12.68%

    Explanation:

    The Effective Annual Interest rate is the nominal interest rate adjusted for the number of compounding periods a financial product will experience in a period of time which is usually a year.

    The formula is,

    Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of compounding periods) - 1

    Plugging in the figures would give,

    EAR = (1 + 0.01) ^ 12 - 1

    EAR = 1.01^12 - 1

    EAR = 12.68%

    You might notice that in the bracket I did not divide the 1% by 12. This is because the 1% was already given as the month's interest rate.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “your investment advisor informs you that you do not need to pay a fee for his services. Instead, he invests your money for one month and ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
On January 30, 2014, your parents lent you $400. On January 30, 2015, you repaid the loan by writing your parents a check for $432. What was the annual interest rate your parents charged you for that loan?
Answers (1)
Which of the following concepts is not consistent with the classical perspective on management? a. Employees may choose not to follow orders. b. Superiors may have as many subordinates as possible within the superior's span of control. c.
Answers (1)
Which of the following is NOT one of the four characteristics of IPOs that puzzle financial economists? Select one: a.
Answers (1)
In the summer of 2002 the euro was valued at slightly less than US$1. By 2008, it had risen to an all-time high of $1.60, but in early 2016, the euro and the dollar were nearly equivalent. This change in value is called
Answers (1)
Categories of expendituresGilberto and Juanita Ivanov live in Swarthmore, PA. Juanita's father, Lorenzo, lives in SwedenFor each of the following transactions that occur in their lives, identify whether it is included in the calculation of U. S.
Answers (1)
New Questions in Business
Which of the following is a record of a transaction that already happened and was paid for? A. an invoice B. A bill C. A receipt D. A receivable
Answers (2)
A company purchased a two-year fire insurance policy on May 1, 2012. It paid the $2,400 premium in cash on the same date and recorded the entry with a debit to Prepaid Insurance for $2,400.
Answers (1)
Market segments that can be effectively reached and served are said to be
Answers (1)
9. An expenditures incurred on factors of production A, cost B, input C, fixed input D, variable input
Answers (1)
Evan has a Bachelor's degree in ethics and human resources, and he has extensive experience working with employees and managers regarding ethics, especially in the area of ethical dilemmas.
Answers (1)
Home » Business » your investment advisor informs you that you do not need to pay a fee for his services. Instead, he invests your money for one month and keeps all of the proceeds before investing it for you.
Sign Up Forgot Password?