Question

Audrey is comparing three investment accounts offering different rates.

Option A: APR of 9.45% compounding monthly
Option B: APR of 9.56% compounding quarterly
Option C: APR of 9.569% compounding daily

She would like to earn at least a 10% annual yield. Which account(s) will give Alexandra the yield she wants?

Options A and B only

Option B only

Options A and C only

Option C only

Answer 1

Use the formula

y = (1+r/n)^(n) - 1

where

y = APY
r = APR
n = compounding frequency