Asked by Michael Bergamo on May 13, 2024
Verified
An investor has a choice of three investments, 6.85% compounded quarterly, 7% pa, and 6.6% compounded monthly. Which rate should the investor choose?
Compounded Quarterly
Interest calculation method where interest is added to the principal every three months, affecting the total interest earned or paid.
Compounded Monthly
A financial term indicating the interest on a deposit or loan is calculated and added to the principal amount each month; it emphasizes the frequent interest capitalization as opposed to annual.
Investor
A person or organization that invests money anticipating to gain financial profits.
- Assess the economic impact of different rates on investments and choose the optimal investment option.
Verified Answer
YP
Learning Objectives
- Assess the economic impact of different rates on investments and choose the optimal investment option.