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The image contains a problem where the given nominal rate is \( 14 \frac{5}{8}\% \) (or \( 14.625\% \)) compounded daily, and two parts need to be solved:

1. **Part (a):** Find the annual yield (also called the effective annual rate, EAR) corresponding to the given nominal rate.
2. **Part (b):** Interpret the annual yield and find the equivalent simple interest rate.

### Solution:

#### Part (a): Finding the Annual Yield (Effective Annual Rate, EAR)

The formula for the effective annual rate (EAR) when interest is compounded more frequently than annually is:

\[
EAR = \left(1 + \frac{r}{n}\right)^n - 1
\]

Where:
- \( r \) is the nominal interest rate in decimal form (here, \( 14.625\% = 0.14625 \)),
- \( n \) is the number of compounding periods per year (for daily compounding, \( n = 365 \)).

Let's calculate this:

\[
EAR = \left(1 + \frac{0.14625}{365}\right)^{365} - 1
\]

Now, I'll compute the result.The effective annual rate (EAR) is approximately **15.75%** when the nominal rate is \( 14 \frac{5}{8}\% \) compounded daily.

#### Part (b): Interpretation and Equivalent Simple Interest Rate

The simple interest rate equivalent to the compound rate is typically approximated by using the nominal rate directly since it doesn't account for compounding. For a nominal rate of \( 14 \frac{5}{8}\% \), the simple interest rate is \( 14.625\% \).

If you'd like to explore more details or have any other questions, feel free to ask! Here are some related questions:

1. What would the effective annual rate be if the compounding was quarterly instead of daily?
2. How does the number of compounding periods per year affect the effective annual rate?
3. What is the formula for converting a nominal interest rate to an effective interest rate for different compounding frequencies?
4. How do you calculate the future value of an investment using compound interest?
5. What are the advantages of daily compounding over annual compounding?

**Tip:** The more frequently interest is compounded, the higher the effective annual rate, even if the nominal rate stays the same.

Find the annual yield corresponding to a 14 5/8% nominal rate compounded daily and interpret it as a simple interest rate.

Learn how to calculate the annual yield (Effective Annual Rate) from a nominal interest rate of 14 5/8% compounded daily. This guide covers compound interest formulas and the interpretation of nominal rates as simple interest rates.

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