You Have $2,500 That You Want to Use to Open

question 306

Multiple Choice

You have $2,500 that you want to use to open a savings account. You have found five different accounts that are acceptable to you. All you have to do now is determine which account you want to use such that you can earn the highest rate of interest possible. Which account should you use based upon the annual percentage rates quoted by each bank? Account A: 3.75%, compounded annually

Account B: 3.70%, compounded monthly
Account C: 3.70%, compounded semi-annually
Account D: 3.65%, compounded continuously
Account E: 3.66%, compounded quarterly

• A) Account A
• B) Account B
• C) Account C
• D) Account D
• E) Account E

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Definitions:

Population Standard Deviation

A measure of the dispersion or spread of all the data points in a population dataset.

Interval Estimate

A range of values derived from sample data that is likely to contain the value of an unknown population parameter.

Sampling Distribution

The probability distribution of a statistic based on all possible random samples that can be drawn from a population.

Sample Mean

The average of a set of numerical values drawn from a larger population.