Question

abc bank is getting ready to offer special interest rates for its student savings accounts. how should the bank advertise its rates in order to encourage people to save money with abc bank?

A.

Account with the highest APY

B.

Account with the highest APR

C.

Account with the lowest APY

D.

Account with the lowest APR

Answer 1

@AnswerMyQuestions

Answer 2

@ikram002p please help

Answer 3

Do you know what APY and APR are?

Answer 4

@ganeshie8 help please

Answer 5

@ar!3

Answer 6

no @AnswerMyQuestions i dont

Answer 7

would you [refer putting ur money in a low interest payning bank ?

Answer 8

*prefer

Answer 9

yes @ganeshie8

Answer 10

why, you don't like money ?

Answer 11

LOL

Answer 12

well i guess the opposite @ganeshie8

Answer 13

lol

Answer 14

thats clever :) so which two options can you eliminate based on that observation ?

Answer 15

strike out D,C @ganeshie8

Answer 16

thats right! answer must be one of A or B

Answer 17

Now you just have to find the meaning of APR and APY.

Answer 18

In simpler terms :

1) APR is the yearly flat rate

2) APY is the rate when you account for compounding

Answer 19

Notice, both will be same if the interest is not compounding

Answer 20

almost all the banks these days compound interest monthly so APY will be more than APR. Wr can conclude below :
\[\text{APY} \ge \text{APR}\]

Answer 21

So the bank better use APY to attract(misguide) students

Answer 22

lol ok thanks @ganeshie8

Answer 23

Great explanation @ganeshie8