Certificate of Deposit

Archive for February, 2009

Question: I want to start a mponey market account with my bank (Navy Federal) what is a Money Market account?

How will it benefit me if I start one?

Answer: NOT TRUE. – what he describes is a CD.
A Money Market account looks like a regular savings account.
There may be a requirement for a minimum deposit, but there are no time limits. It is usually held by an investment firm (of the bank) and is not covered under the FDIC. It usually pays a much higher interest rate than a regular bank savings account and varies month to month based on the prime rate. U can withdraw at any time and there is usually a min amount for a withdrawal. Checks are also issued to make withdrawals.
If u have $5000 or more in a regular account think about converting some to a MM account. When ur regular account gets low, just transfer some from MM to it, or pay large bills from it.

Money Market Account

Question: This has been a hard one…I don’t feel confident about my answer…can someone check me please?

The formula for calculating the amount of money returned for an initial deposit into a bank account or CD (Certificate Of Deposit) is given by

A is the amount of the return.
P is the principal amount initially deposited.
r is the annual interest rate (expressed as a decimal).
n is the number of compound periods in one year.
t is the number of years.

Carry all calculations to six decimals on each intermediate step, then round the final answer to the nearest cent.
Suppose you deposit $3,000 for 9 years at a rate of 6%.
If a bank compounds continuously, then the formula used is A = Pe^rt
where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding. Round your answer to the hundredth’s place.
A=3000(2.7183)^(0.06)9
A=3000*(2.7183)^0.54
A=3000*1.71601305672951
A=$5148.04

Answer: A = 3000*e^(.06*9) = $5,148.02

You’re off by two cents because you rounded e, but your math is good. Also, keep the 9 inside the parentheses.

[Investing Online] 2-3% Daily Return On Your Money

Question: opening a Certificate Of Deposit and how much can be earned total?

I am trying to open a CD with bank of america. I have to put in $5000 and the APY is 5.00%. It will stay put for 4 months. How much will I earn after I get back the money? I am guessing $50 in 4 months which is not much? Am I right? Any comments? How does a CD work? Is it safe and will I get all my money back and then some? Is this considered an investment?

Answer: a CD is a way to invest your money for a certain amount of time for a set interest rate. In order to figure out how much you would earn on a CD you need to know the APY which you say is 5% so you take the amount you are investing, which is 5000 and you multiply that by 0.05, that you will give you the amount you earn in a year, divide that by 12 and it will give you around the amount you earn a month. This is just an estimate.
If you do not touch the money for the term of the cd you will get your money back and then some and yes it is safe and yes it is considered an investment.

High Yield Bank CD at 12% APY Parit-inside-no_comments-visible-5155.MPG