Find the annual percentage yield for an investment at the following rates. (Round your answers to two decimal places.) (a) 6.1% compounded monthly % (b) 8% compounded continuously

a.6.27%

b.8.33%

Explanation:

a.

The formula for annual percentage yield based on monthly compounding is shown below:

APY= (1 + r/n )n – 1

r=interest rate=6.1%

n=number of times interest is compounded in year=12

APY=(1+6.1%/12)^12-1

APY=6.27%

b.

When interest is compounded  continuously, APY is computed using the below formula:

APY=e^(rt)-1

e= a constant number=2.7182818

r=interest rate=8%

t=1( since the APY is measured annually)

APY=2.7182818^(8%*1)-=8.33%