17 multiple - choice 1 point in which kind of savings plan does the interest rate vary from month to month…

17 multiple - choice 1 point in which kind of savings plan does the interest rate vary from month to month? regular savings certificate of deposit money market u.s. savings bonds 18 multiple - choice 1 point if you deposit $100 in an account with an annual interest rate of 6 percent compounded monthly, after 12 months you will have $6 $6.18 $160 $106.18

17 multiple - choice 1 point in which kind of savings plan does the interest rate vary from month to month? regular savings certificate of deposit money market u.s. savings bonds 18 multiple - choice 1 point if you deposit $100 in an account with an annual interest rate of 6 percent compounded monthly, after 12 months you will have $6 $6.18 $160 $106.18

Answer

Explanation:

Step1: Recall savings - plan interest - rate characteristics

Regular savings usually have a relatively stable interest - rate set by the bank. Certificates of deposit (CDs) have a fixed interest rate for the term of the CD. U.S. Savings Bonds have a set interest - rate formula. Money market accounts often have interest rates that can vary based on market conditions, so they can change from month to month.

Step2: Recall compound - interest formula

The compound - interest formula is $A = P(1+\frac{r}{n})^{nt}$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), $n$ is the number of times interest is compounded per year, and $t$ is the number of years. Here, $P=$100$, $r = 0.06$, $n = 12$, and $t = 1$.

Step3: Calculate the amount after 12 months

Substitute the values into the formula: $A=100(1 +\frac{0.06}{12})^{12\times1}=100(1 + 0.005)^{12}=100\times(1.005)^{12}\approx100\times1.0616778\approx$106.18$.

Answer:

  1. C. money market
  2. D. $106.18$