An account with an initial balance of $4,000.00 and a 3% interest rate has a balance of $4,121.66 at the end of one year. What is the effective annual yield? A. 97.05% C. 3.00% B. 2.95% D. 3.04%

Answers

The effective annual yield is 3.04%

What is effective annual yield?

Effective annual yield is the rate of return that considers the frequency of compounding, in other words, the number of times in a year that interest on the balance is compounded.

The easiest way to determine the effective annual yield in this case is to compare the end of the year balance with the initial balance at the start of the year

Another way to determine the effective annual yield is use the below formula which considers that interest rate is 3% compounded monthly, in other words, n, the frequency of compounding is 12

effective annual yieldis 3.04%What is effective annual yield?Effective annual yieldis the rate of return that considers the frequency of compounding, in other words, the number of times in a year thatintereston the balanceeffective annual yieldin this case is to compare the end of the yearbalancewith theinitial balanceat the start of the yeareffective annual yield=(ending balance/initial balance)-1initial balance=$4000effective annual yield=($4,121.66/$4000)-1effective annual yield=3.04%effective annual yieldis use the below formula which considers thatinterest rateis 3% compounded monthly, in other words, n, the frequency of compounding is 12effective annual yieldon :https://brainly.com/question/3125221