Question: Hector Garcia has shopped around for the best interest rates

Hector Garcia has shopped around for the best interest rates for his investment of $10,000 over the next year. He has found the following:
Stated Rate Compounding
6.10%........................................ annual
5.90%...................................... semiannual
5.85%......................................... monthly
a. Which investment offers Hector the highest effective annual rate of return?
b. Assume that Hector wants to invest his money for only six months and the annual compounded rate of 6.10 percent is not available. Which of the remaining investments should Hector choose?

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  • CreatedMarch 26, 2015
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