If you could borrow at 9.5% compounded semi-annually or at 9.4% compounded monthly,which would you prefer?
A) 9.5% compounded semi-annually
B) Indifferent
C) 9.4% compounded monthly

Question

Quizplus · Accepted Answer

Effective interest rate = 11ea7fdb_fc29_bae2_a768_0943ffd62860_TB2902_00 - 1
Effective interest rate for semi-annual = 11ea7fdb_fc29_bae3_a768_b5c146f007fc_TB2902_00 - 1 = 9.73%
Effective interest rate for monthly = 11ea7fdb_fc29_bae4_a768_494b742b6093_TB2902_00 - 1 = 9.82%

If You Could Borrow at 9