Essays on Certificate Of Deposit

The chapter under consideration is the Chapter 5, Financial Services: Savings Plans and Payment Accounts. The chapter gives to the reader five important aspects that contribute to the understanding of the personal finances. 1. The first aspect is the selection and use of the available financial services in the market and the factors that influence the decision to select a specific financial service. The selection of the financial service depends on of the needs of the client and the convenience of fees and conditions. One of the financial services is the availability of cash. The cash is the most ...

Risk exposures: The Financial Transaction Risks Table

Features of the method used to measure the interest rate identified Before determining the best method to be used in the measurement of the interest risk, it is essential to assess the source of the risk. The most common sources of interest rate risk are security mismatching for various items in the balance sheet depending on whether the interest rate is fixed or variable. The value assets lead to interest rate risk when there are valuation problems as well as in situations where interest rates are not aligned with the liabilities and assets (Kaufman, 1984). Various methods are applicable ...

Take the current amount you have in your checking or savings account ($9,052.36 USD). Suppose you have a choice of keeping your money for five years in a savings account with a 2% interest rate, or in a five year certificate of deposit with an interest rate of 4.5%. Calculate how much interest you would earn with each option over five years time with continuous compounding.

The continuous compounding follows the use of a universally accepted formula given as:

A = Pe rt where:

P is the current amount held in checking or the savings account. This amount is given as $9,052.36 USD; ...