Earning a 5 percent interest rate with annual compounding is better than earning a 4.95 percent interest rate with semiannual compounding.

Name: Earning a 5 percent interest rate with annual compounding is better than earning a 4.95 percent interest rate with semiannual compounding.
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Quizplus · Accepted Answer

With semiannual compounding, interest is compounded more frequently, which can lead to a higher effective annual rate (EAR) compared to annual compounding at a slightly higher nominal rate.

Earning a 5 Percent Interest Rate with Annual Compounding Is