Question

@Becki

Savings account A and savings account B both offer APRs of 2%, but savings account A compounds interest quarterly, while savings account B compounds interest annually. 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

Answer 1

A

Answer 2

B. Because you'll get interest on your interest 4 times a year instead of just once.