Explore BrainMass

Interest rate alternatives

12 Assuming you will leave your money in the bank for the entire year, which of the following interest rate alternatives would you prefer?
a. 11.75 % compounded semi-annually
b. 11.75 % compounded quarterly
c. 11.45 % compounded weekly
d. 11.45 % compounded annually
e. None of the above or insufficient information

Solution Preview

We would prefer the alternative that has the highest effective annual rate (EAR)
a. 11.75 % compounded ...

Solution Summary

The solution explains the correct option in relation to interest rate alternatives