This question: 2 point(s) possible
$K$
An account has a rate of $2.2 %$ . Find the effective annual yield if the interest is compounded daily. (Assume 365 days in a year.)
(i) Click the icon to view some finance formulas.

The effective annual yield is $◻ %$ .
(Round to the nearest hundredth as needed.)

Answer

Expert–verified

Hide Steps

Answer

The effective annual yield is $2.22 %$

Steps

Step 1 ：Use the compound interest formula $A = P (1 + \frac{r}{n})^{n t}$ to find the effective annual yield with daily compounding

Step 2 ：Set $P = 1$ and $t = 1$ year to simplify the calculation

Step 3 ：Calculate the effective annual yield using $(1 + \frac{r}{n})^{n} - 1$ , where $r = 0.022$ and $n = 365$

Step 4 ：Round the effective annual yield to the nearest hundredth

Step 5 ：The effective annual yield is $2.22 %$