which of the following accounts would have the largest total return after 1 year?

a) 6% APR compounded monthly
b) 6% APR compounded annually
c) 6% APY
d) 6% APR compounded continuously
e) not enough information to tell
f) they all would have the same total return

Question

which of the following accounts would have the largest total return after 1 year? 

a) 6% APR compounded monthly
b) 6% APR compounded annually 
c) 6% APY
d) 6% APR compounded continuously
e) not enough information to tell
f) they all would have the same total return

anonymous · Answer

why?

anonymous · Answer

for the formula for compounded continuously is A = Pe^rt   where P is your principal and r is your annual rate and t is year.  monthly and annually can be calculated using A = P (1+ r/n)^nt where n is the times compounded annually and r is interest rate (in decimal) and t is time in years.. if you plug in some dummy value for P you can check each one.

anonymous · Answer

example $$A = 100*e ^{0.06*1}$$  which should give you the return on 100$ invested for 1 year at 0.06 (6%) continuously for 1 year