Question: The R&M Bank has offered you the choice between two investment accounts: #1 pays interest at a rate of 12% compounded semi-annually #2 pays interest

The R&M Bank has offered you the choice between two investment accounts: #1 pays interest at a rate of 12% compounded semi-annually #2 pays interest at a rate of 11% compounded monthly Which investment account do you prefer and why?

a) #2 highest effective rate

b) #1 12% is greater than 11%

c) #1 highest effective rate

d) #2 greater compounding frequency

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