Question

In: Accounting

A meteorite landed in Lindsay’s back yard. She sold it to a science museum for $10,000....

A meteorite landed in Lindsay’s back yard. She sold it to a science museum for $10,000. Which of the following investments has the higher effective rate, assuming that Lindsay is investing the money for one year: a certificate of deposit (CD) with a 3.00% stated interest rate compounded monthly, or a money market fund that pays 3.25% simple interest?

The CD has a higher effective interest rate and will earn $3,932.61 more than the money market fund.

The money market fund has a higher effective annual interest rate and will earn $20.84 more than the CD.

The money market fund has a higher effective annual interest rate and will earn $300.00 more than the CD.

The money market fund has a higher effective annual interest rate and will earn $25.00 more than the CD.

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