Would you prefer a savings account that paid 7% interest compounded quarterly,6.8% compounded monthly,7.2% compounded weekly,or an account that paid 7.5% with annual compounding?
A) 7% compounded quarterly
B) 6.8% compounded monthly
C) 7.2% compounded weekly
D) 7.5% compounded annually

Question

Quizplus · Accepted Answer

EAR = [1 + (0.07 / 4)]⁴ − 1 = 0.0719, or 7.19%EAR = [1 + (0.068 / 12)]¹² − 1 = 0.0702, or 7.02%EAR = [1 + (0.072 / 52)]⁵² − 1 = 0.0746, or 7.46%EAR = APR = 7.5%

Would You Prefer a Savings Account That Paid 7% Interest