Quantcast

A community for students. Sign up today!

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

starrhunter

  • one year ago

help please? Part 1: Explain which companies would advertise APY over APR and describe how this would help them attract customers. Part 2: Create a unique APR (state how often the rate is compounded) and calculate the corresponding APY. Use a comparison of the two rates to verify your answer to part 1.

  • This Question is Closed
  1. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    your lacking information for the problem in your post

  2. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    APR of $1, compounded is:\[(1+\frac rn)^n\] APY is the rate it would have been if it had been stated at a compounding of 1 year:\[(1+k)\]where k is the APY \[1+k=(1+\frac rn)^n\] \[k=(1+\frac rn)^n-1\]

  3. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Yes it is a bit vague isn't it? Would this be the answer to my question or a formula to plug my own numbers into?

  4. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    this is a general formula to aid you along the way let r be the rate that is compounded, let n be the number of times a year it gets assessed, and then k (or the APY) is just a function r and n as stated

  5. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    since the APR and the APY give the same "values" at the end of the year, the strategy lies in how people relate the value of a rate to their investments

  6. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    I am supposed to create my own scenaario here. But I can't come up with a rational one to really protray the relationship between apr and apy.

  7. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    usually, a higher numerical value attracts more investors on a psychological level

  8. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    think of a rate ... think of how many times a year you want to assess that rate ...

  9. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    okay so. 15.5% compounded monthly

  10. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    then r = 15.5, n=12 and k = (1+.0155/12)^12 - 1

  11. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    got my decie in the wrong spot :) 0.155/12 that is

  12. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    .0129

  13. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    APR = 15.5 % APY = 16.6449 % according to the workings of my patent pending formulas

  14. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Ah okay, this seems to make it more concrete. thank you :)

  15. amistre64
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    youre welcome; and just to fix a typo ... APY = 16.6499 % these old eyes aint what they used ta be

  16. starrhunter
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Ahaha, I was checking that on my calculator and I noticed that too, no worries. It happens to the best of us!

  17. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Ask a Question
Find more explanations on OpenStudy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.