$18$

Multiple Choice

$5$ points

Two banks $($A & B$)$ offer a $5\%$ annual yield on a $10-$year CD$.$

Bank A$\text{'}$s CD offers monthly compounding

Bank B$\text{'}$s CD offers daily compounding.

If you invest $$5,000$ in a CD$,$ which of the following is TRUE?

At maturity, the CD for Bank A would be worth $$8,243\mathrm{.}32.$

At maturity, the CD for Bank B would be worth $$8,235\mathrm{.}05$

Bank A$\text{'}$s CD is preferable since it offers monthly compounding.

All statements are true

Bank B$\text{'}$s CD is preferable since the more frequent compounding period means you will have more money at maturity.