Which Account Would Be Preferred by a Depositor: an 8

question 81

Multiple Choice

Which account would be preferred by a depositor: an 8% APR with monthly compounding or 8.5% APR with semiannual compounding?

• A) 8.0% with monthly compounding.
• B) 8.5% with semiannual compounding.
• C) The depositor would be indifferent.
• D) The time period must be known to select the preferred account.

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Definitions:

Working Memory

A cognitive system with a limited capacity, responsible for temporarily holding information available for processing and decision-making.

Short-Term Memory

The part of the memory system where information is stored for a short duration, typically a few seconds to a minute.

Semantic Memory

A type of long-term memory involving the recall of general facts, concepts, and knowledge about the world, distinct from personal experiences.

Episodic Memory

A type of long-term memory that involves the recollection of specific events, situations, and experiences, including the context and emotions associated with them.