Question: Suppose for its deposit accounts Simplii Financial is offering to pay interest at a rate of 0.4% per month with monthlycompounding, but Tangerine is offering

Suppose for its deposit accounts Simplii Financial is offering to pay interest at a rate of 0.4% per month with monthlycompounding, but Tangerine is offering to pay interest at a rate of 1.2% per quarter with quarterly compounding.(One quarter is equal to threemonths.) Which financial institution is offering the higherrate?

The higher rate is being offered by Simplii Financial

Simplii Financial

Tangerine

because the effective annual rate of Simplii Financial is

and the effective annual rate of Tangerine is

(Round to six decimalplaces.)

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