Mathematics
Chou745
2016-04-23 10:15:57
Savings account A and savings account B both offer APRs of 6%, but savings account A compounds interest semiannually, while savings account B compounds interest quarterly. Which savings account offers the higher APY? A. Savings account B, because it has more compounding periods per year B. Savings account A, because it has more compounding periods per year C. Savings account A, because it has fewer compounding periods per year D. Savings account B, because it has fewer compounding periods per year
ANSWERS
Bellamcbella
2016-04-23 13:20:25

A. Savings account B, because it has more compounding periods per year. Example: Interest semiannual 1,000×(1+0.06÷2)^(2)=1,060.9 interest quarterly 1,000×(1+0.06÷4)^(4)=1,061.36. Compare between them and see which one is higher

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