Kristina Can Invest in a Two-Year GIC for 5

question 261

Short Answer

Kristina can invest in a two-year GIC for 5.85% compounded monthly or 6% compounded annually. Which option pays the most interest? Support your answer with calculations.

---

Definitions:

Equilibrium Quantity

The amount of goods or services available matches the amount requested at the market price.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the trade of goods or services.

Equilibrium

A state of balance where demand equals supply in a market, leading to a stable price.