Question
In: Economics
An online bank is offering to pay 0.25% interest per month on deposits. Your local bank...
An online bank is offering to pay 0.25% interest per month on deposits. Your local bank offers to pay 0.65% interest quarterly (every 3 months). Which is the higher interest rate?
Solutions
Expert Solution
Answer:-
Effective interest rate for monthly rates = {(1+0.25%) ^12} -1
= 1.03041 – 1
= 3.04
Effective interest rate for monthly rates = {(1+0.65%) ^4} -1
= 1.0263 – 1
= 2.63
Online Bank is offering higher interest rate.
Rahul Sunny answered 2 years agoRelated Solutions
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