- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. Rates and Returns
- Subject 4. Annualized Return
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 |