Answer:
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%
