Rank each interest rate and compounding scheme in order from highest yield to lowest yield.
A)10.5% compounded semi-annually, 10.5% compounded monthly, 10.5% compounded continuously
B)10.5% compounded monthly, 10.5% compounded continuously, 10.5% compounded semi-annually
C)10.5% compounded continuously, 10.5% compounded semi-annually, 10.5% compounded monthly
D)10.5% compounded continuously, 10.5% compounded monthly, 10.5% compounded semi-annually
E)10.5% compounded semi-annually, 10.5% compounded continuously, 10.5% compounded monthly

Question

Rank each interest rate and compounding scheme in order from highest yield to lowest yield. ​
A)10.5% compounded semi-annually, 10.5% compounded monthly, 10.5% compounded continuously
B)10.5% compounded monthly, 10.5% compounded continuously, 10.5% compounded semi-annually
C)10.5% compounded continuously, 10.5% compounded semi-annually, 10.5% compounded monthly
D)10.5% compounded continuously, 10.5% compounded monthly, 10.5% compounded semi-annually
E)10.5% compounded semi-annually, 10.5% compounded continuously, 10.5% compounded monthly

Quizplus · Accepted Answer

The more frequently interest is compounded, the higher the yield. Continuous compounding yields the highest, followed by monthly, then semi-annually.

Rank Each Interest Rate and Compounding Scheme in Order from Highest