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In Business / College | 2025-07-07

Consider which option results in a higher effective rate. Bank A offers 4% compounded annually. Bank B offers 4% compounded quarterly.

Asked by cleavebaker8

Answer (2)

Bank A offers a 4% interest rate compounded annually, while Bank B offers the same rate compounded quarterly. After calculating the effective annual rates, Bank B results in a higher rate of approximately 4.06%. Therefore, Bank B is the better option for earning interest. ;

Answered by GinnyAnswer | 2025-07-07

Bank B offers a higher effective interest rate of approximately 4.06% due to quarterly compounding, compared to Bank A's 4% compounded annually. Therefore, Bank B is the better choice for earning interest. Calculating the effective rates reveals this difference clearly.
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Answered by Anonymous | 2025-07-11

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