Question
You have $1,500 to invest. You have 2 choices: savings accountA, which earns 8.75 percent compounded annually or savings accountB, which earns 8.50 percent compounded
You have $1,500 to invest. You have 2 choices: savings accountA, which earns 8.75 percent compounded annually or savings accountB, which earns 8.50 percent compounded monthly. Which accountshould you choose and why?
B; because the quoted rate is higher
A; because it has a higher effective annual rate
B; because it has a higher effective annual rate
A; because it has the higher stated rate
A; because it has the higher quoted rate
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Financial Theory and Corporate Policy
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
4th edition
321127218, 978-0321179548, 321179544, 978-0321127211
