2. Suppose you currently have $3,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 2% interest compounded annually. How much will you have when the CD matures

The value of the CD would probably be $3183.62 in three years as shown below.

Explanation:

The formula applicable here is future value ,which means the value of the investment in 3 years at 2% compound interest rate.

The formula is given as:

FV=PV*(1+r)^n

FV is the unknown here

PV is the present value of the amount to be invested which is $3000

r is the rate of return on investment at 2%

n is the time horizon of the investment which is 3 years

FV=$3000*(1+0.02)^3

FV=$3183.62

In other words, by investing in the certificate of deposit, the investor would likely have $3183.62 in three years' time.

The rate on certificate of deposit is usually low because it is one the safest investment vehicle ,hence offers a lower rate of return,that shows clearly the positive relationship between risk and return on investment

answer; /// blank(1); increases; blank(2); decreases;

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best of luck,

the divergent