Consider the following investment alternatives: Which alternative offers you the lowest effective rate of return?
A)Investment A
B)Investment B
C)Investment C
D)Investment D

Question

Consider the following investment alternatives:  Which alternative offers you the lowest effective rate of return?
A)Investment A 
B)Investment B 
C)Investment C 
D)Investment D

Quizplus · Accepted Answer

Investment A has a nominal rate of 6%, but it is compounded daily which results in an effective rate of return of only 5.87%. This is the lowest effective rate of return among all the investment options.

Consider the Following Investment Alternatives: Which Alternative Offers You