A University Student Is Investing $100 in a Deposit and Can

question 5

Multiple Choice

A university student is investing $100 in a deposit and can choose the compounding period that applies. To maximise the effective interest rate, she will choose___________ compounding.

• A) quarterly
• B) monthly
• C) six- monthly
• D) daily

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Definitions:

Maximum Price

A price ceiling set by a government or regulatory body, above which a particular good or service cannot be sold, often to protect consumers.

Equilibrium Prices

The price at which the quantity of a good supplied is equal to the quantity demanded, leading to market balance.

Consumer Surplus

The difference in the total amount that customers are ready and financially able to invest in a good or service and the amount they truly pay.

Producer Surpluses

The difference between what producers are willing to sell their goods for and the actual price they receive.