Question: 1) Case study about the asynchrony between the capitalization period and the interest rate period - nominal vs. effective and nominal vs. real interest rates.

1) Case study about the asynchrony between the capitalization period and the interest rate period - nominal vs. effective and nominal vs. real interest rates.

Company X intends to invest a certain amount. Bank A offers him a gross annual effective rate (TAEB) of 10%, allowing him to choose between half-yearly or monthly capitalizations (interest subject to IRS at 28%). Bank B offers the saver the net annual effective rate (TAEL) of 8%. Which option should the saver choose?

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