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The R&M Bank has offered you the choice between two investment accounts: #1 pays interest at a rate of 12% compounded semi-annually #2 pays interest

The R&M Bank has offered you the choice between two investment accounts:

#1 pays interest at a rate of 12% compounded semi-annually

#2 pays interest at a rate of 11% compounded monthly

Which investment account do you prefer and why?

#2, highest effective rate

#1, highest effective rate

#1, 12% is greater than 11%

#2, greater compounding frequency

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