Which is the most attractive of the following interest rates offered on a savings account?
A) 2.7% compounded annually
B) 2.68% compounded semiannually
C) 2.66% compounded quarterly
D) 2.64% compounded monthly
E) All of them offer the same effective rate.

Question

Quizplus · Accepted Answer

The higher the compounding frequency, the higher the effective annual rate. Option A has the highest compounding frequency - annually, which makes it the most attractive choice.

Which Is the Most Attractive of the Following Interest Rates