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Bank A pays 5% interest compounded annually on deposits, while Bank B pays 4.25% compounded daily. a. Based on the EAR (or EFF%), which bank
Bank A pays 5% interest compounded annually on deposits, while Bank B pays 4.25% compounded daily. a. Based on the EAR (or EFF\%), which bank should you use? I. You would choose Bank A because its EAR is higher. II. You would choose Bank B because its EAR is higher. III. You would choose Bank A because its nominal interest rate is higher. IV. You would choose Bank B because its nominal interest rate is higher. V. You are indifferent between the banks and your decision will be based upon which one offers you a gift for opening an account. during an entire compounding period in order to receive any interest. the year, then Bank A might be preferable. might be preferable. the year, then Bank B might be preferable. the year, then Bank B might be preferable. the year, then Bank A might be preferable
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