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You have just purchased a four-month, $600,000 negotiable CD, which will pay a 7.5 percent annual...

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Finance

You have just purchased a four-month, $600,000 negotiable CD,which will pay a 7.5 percent annual interest rate.

a. If the market rate on the CD rises to 8percent, what is its current market value?
b. If the market rate on the CD falls to 7.25percent, what is its current market value?

Answer & Explanation Solved by verified expert
3.7 Ratings (609 Votes)
The payout of the fourmonth 600000 negotiable CD at 75 annual interest rate is calculated as 600000175412 Here 4 refers to the time period of the CD that is 4 months and 12    See Answer
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Transcribed Image Text

You have just purchased a four-month, $600,000 negotiable CD,which will pay a 7.5 percent annual interest rate.a. If the market rate on the CD rises to 8percent, what is its current market value?b. If the market rate on the CD falls to 7.25percent, what is its current market value?

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