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Your grandma is thinking of putting some of her retirement savings into a Term Deposit for one year, and the bank offers several options: Option 1 – 6% return per annum compounding annually. Option 2 – 3% return every six-months compounding semi-annually. Option 3 – 1.5% return every quarter compounding quarterly.   She knows you have learnt about the compounding interest and wants your advice on which option will give her the best return. What option will you recommend to your grandma? Option 1 All three options offer the same return hence any option is a good option Option 2 Option 3

Your grandma is thinking of putting some of her retirement savings into a Term Deposit for one year, and the bank offers several options: Option 1 – 6% return per annum compounding annually. Option 2 – 3% return every six-months compounding semi-annually. Option 3 – 1.5% return every quarter compounding quarterly.   She knows you have learnt about the compounding interest and wants your advice on which option will give her the best return. What option will you recommend to your grandma? Option 1 All three options offer the same return hence any option is a good option Option 2 Option 3

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Your grandma is thinking of putting some of her retirement savings into a Term Deposit for one year, and the bank offers several options:

Option 1 – 6% return per annum compounding annually.

Option 2 – 3% return every six-months compounding semi-annually.

Option 3 – 1.5% return every quarter compounding quarterly.

 

She knows you have learnt about the compounding interest and wants your advice on which option will give her the best return.

What option will you recommend to your grandma?

  • Option 1
  • All three options offer the same return hence any option is a good option
  • Option 2
  • Option 3

 

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