Centre Bank Pays 2

question 25

Multiple Choice

Centre Bank pays 2.5 percent interest,compounded annually,on its savings accounts.Country Bank pays 2.5 percent simple interest on its savings accounts.You want to deposit sufficient funds today so that you will have $1,500 in your account 2 years from today.The amount you must deposit today:

• A)is the same regardless of which bank you choose because they both pay compound interest.
• B)is the same regardless of which bank you choose because they both pay simple interest.
• C)is the same regardless of which bank you choose because the time period is the same for both banks.
• D)will be greater if you invest with Centre Bank.
• E)will be greater if you invest with Country Bank.

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Definitions:

Normal Approximations

The use of the normal distribution to approximate the distribution of sample statistics for large sample sizes, even if the data itself is not normally distributed.

Exact Probabilities

The precise likelihood, often computationally derived, of observing a particular outcome in a statistical experiment.

Sample Proportion

The ratio of members in a statistical sample who have a particular trait, relative to the total sample size.

Probability

The evaluation of the chances that an event takes place.