You have the choice between two investments that have the same maturity and the same nominal return.
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You have the choice between two investments that have the same maturity and the same nominal return. Investment A pays SIMPLE interest, investment B pays compounded interest. Which one should you pick?
a). A, because it has a higher effective annual return.
b). A and B offer the same return, thus they are equally as good.
c). Not enough information.
d). B, because it has a higher effective annual return.
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