CFA Practice Question

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CFA Practice Question

What is the value after three years of $1,000 invested at a 6% annual rate, if interest is compounded monthly?
A. $ 1,191.02
B. $ 1,196.68
C. $ 1,197.22

User Contributed Comments 8

User Comment
jesshujia could anyone tell me how to get that result?
noonah jess, compounded monthly means interest rate is 6pct/12=0.5pct. Three years=3*12=36months. Plug all no's into equation.
Shelton 1000 * (1+0.06/12)^36 = 1196.68 (C)
toxoplasmosis I got the result using the formula but got a different one with the BA II plus.Is my calculator having prob.?
bsm9 Yes, my BA 11 plus gave something completely different when I did the following:
n=3
i/y=6%
PV=-1000
PMT=0
P/Y=12
C/Y=12
SOLVE FV
mpasternack Make sure you clear TVM in your calculator if you are getting the wrong answer when solving for TVM questions (2nd, CLR TVM for BA II Plus)
jrojasut09 @bsm: make sure you're converting the interest rate from nominal to effective. The effective rate of 6% compounded monthly is 6.1678.
clafuente @bsm

I/y=6%/12
N=36
Pv=-1000
CPT FV
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