Intermediate. The details of four short-term investments are as follows:

Investment A pays interest of 1.7 per cent every 3 months Investment B pays interest of 3.4 per cent every 6 months Investment C pays interest of 5.4 per cent every 9 months Investment D pays interest of 7.0 per cent every 12 months The investment that gives the highest effective annual rate of interest, assuming that the interest is reinvested, is:

(a) Investment A

(b) Investment B

(c) Investment C

(d) Investment D (2 marks)

CIMA P1 Performance Operations