Suppose a bank expects to issue 45-day negotiable CDs for $150 million.The interest rate on these CDs is 6.35 percent.What is the dollar amount in interest the bank will owe on these CDs at the end of the 45-day period?

Question

Quizplus · Accepted Answer

To find out the amount of interest the bank will owe on these CDs, we need to use the formula:

Interest = Principal x Rate x Time

where Principal is $150 million, Rate is 6.35% and Time is 45/365 (as interest rate is annual and we need to find interest for 45 days only)

Putting these values in the formula, we get:

Interest = $150,000,000 x 6.35% x (45/365)
Interest = $1,190,625

Therefore, the correct answer is B.

Suppose a Bank Expects to Issue 45-Day Negotiable CDs for $150