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Two banks offer a 10-year CD. Bank A's CD offers 5% yield with monthly compounding; while Bank B's CD offers 4.879% yield with daily compounding.
Two banks offer a 10-year CD. Bank A's CD offers 5% yield with monthly compounding; while Bank B's CD offers 4.879% yield with daily compounding. Assume you're considering investing $5,000 in a CD. Which of the following is TRUE? Bank B's CD is preferable since it has a more frequent compounding period. Bank A's CD is preferable since it has a higher yield. At maturity, a $5,000 CD from both banks would be worth the same. At maturity, the CD for Bank A would be worth $8,235.05 At maturity, the CD for Bank B would be worth $8,243.32
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