Assume JP Morgan has a choice between two deposit accounts.Account A has an annual percentage rate of 7.55 percent but with interest compounded monthly.Account B has an annual percentage rate of 7.45 percent with interest compounded continuously.Which account provides the highest effective annual return?
A)Account A
B)Account B
C)Both provide the same effective annual return.
D)We don't have sufficient information to make a choice.

Question

Quizplus · Accepted Answer

Account A has a higher effective annual return because the effective annual rate (EAR) for Account A, compounded monthly, is higher than the EAR for Account B, compounded continuously.

Assume JP Morgan Has a Choice Between Two Deposit Accounts