Assume JP Morgan has a choice between two deposit accounts. Account A has an annual percentage rate of 7.55 percent but with interest compounded monthly. Account B has an annual percentage rate of 7.45 percent with interest compounded quarterly. Which account provides the highest effective annual return?
A) Account A
B) Account B
C) Both provide the same effective annual return.
D) We don't have sufficient information to make a choice.

Question

Quizplus · Accepted Answer

The effective annual rate of Account A is 7.77 percent while the effective annual rate of Account B is 7.60 percent. Therefore, Account A provides the highest effective annual return.

Assume JP Morgan Has a Choice Between Two Deposit Accounts