The fairest method for calculating interest on an account used ____ method for determining the balance to which the interest rate is applied.
A)minimum-balance
B)quarterly compounding
C)APY
D)average daily balance

Question

Quizplus · Accepted Answer

The most accurate method for determining the balance to which the interest rate is applied is the average daily balance method. This method takes into account the daily balance of the account over the entire statement period, which is an effective way to minimize interest charges for the account holder. The other options listed (minimum-balance, quarterly compounding, and APY) are not related to how the account balance is calculated for the purpose of applying interest.

The Fairest Method for Calculating Interest on an Account Used