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Question

For life insurance policies, some of the premium pays for the cost of the insurance and the remainder goes toward the cash value of the policy and earns interest like a savings account. Suppose that on the cash value of their policies, one insurance company pays $4.8 \%$ compounded monthly and another pays $4.82 \%$ compounded semiannually. Which company offers a higher yield?

Solution

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Answered 2 years ago

Step 1

1 of 4To determine which company offers a higher yield we will compute the annual percentage yield of each investment situation.

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