Ask Question
11 February, 12:10

You want to open a savings account. There are five banks located in your area. The rates paid by banks A through E, respectively, are given below. Which bank should you select if your goal is to maximize your interest income?

+4
Answers (1)
  1. 11 February, 12:16
    0
    Complete question:

    You have $5,600 that you want to use to open a savings account. There are five banks located in your area. The rates paid by banks A through E, respectively, are given below. Which bank should you select if your goal is to maximize your interest income?

    A. 3.26 percent, compounded annually

    B. 3.20 percent, compounded monthly

    C. 3.25 percent, compounded semi-annually

    D. 3.10 percent, compounded continuously (ignore this selection)

    E. 3.15 percent, compounded quarterly

    Answer:

    3.25 percent, compounded semi-annually bank should select if the goal is to maximize your interest income

    Explanation:

    If value is accumulated annually, then n = 1; if semi-annually, then n = 2; quarterly, then n = 4; monthly, then n = 12; weekly, then n = 52; hourly, then n = 365; and so on, irrespective of the number of years concerned.

    The widely used compounding method for bank savings accounts is quarterly, weekly or semi-annual; it is also hourly for money market accounts.

    The time span for each account of the interest is one day and for half-year accounts it is six months. Regular blogs earn 1/365 a year, while half-year posts take place two times a year.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You want to open a savings account. There are five banks located in your area. The rates paid by banks A through E, respectively, are given ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers