You are offered three investments. What is the best investment ?
A)The first promises to earn 20% compounded annually.
B) The second will earn 19.5% compounded quarterly.
C) The third will earn 19% compounded weekly.

Question

You are offered three investments. What is the best investment  ?
A)The first promises to earn 20% compounded annually.
B) The second will earn 19.5% compounded quarterly.
C) The third will earn 19% compounded weekly.

Quizplus · Accepted Answer

The second option, with a 19.5% interest rate compounded quarterly, offers the best investment due to the effect of more frequent compounding periods within a year, which results in a higher effective annual rate compared to the other options.

You Are Offered Three Investments