You have money to invest in interest earning deposits. Deposits at your bank pay 3.5% compounded semiannually. Deposits at a local trust company pay 3.625% compounded annually and deposits at a credit union pay 3.45% compounded monthly. What institution offers the best rate of interest for your deposit? [Hint: Interest rates given are not directly comparable. So, you may want to think about effective interest rates]

Answer rating: 100% (QA)

To compare the interest rates offered by the three institutions we need to calculate the effective a... View the full answer