Which of the Following Statements Is Correct, Assuming Positive Interest

question 80

Multiple Choice

Which of the following statements is correct, assuming positive interest rates and holding other things constant?

• A) Banks A and B offer the same annual rate of interest, but A pays interest quarterly and B pays semiannually. A deposit in Bank B will have a higher value in five years.
• B) Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays monthly. A deposit in Bank B will have a higher value in five years.
• C) Banks A and B offer the same nominal annual rate of interest, but A pays interest daily and B pays semiannually. A deposit in Bank B will have a higher value in five years.
• D) Banks A and B offer the same nominal annual rate of interest, but A pays interest weekly and B pays quarterly. A deposit in Bank B will have a higher value in five years.

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Definitions:

Piece-rate Pay

A compensation system where workers are paid based on the quantity of items produced or tasks completed.

Merit Pay

A compensation strategy that rewards employees based on their performance or achievements, often measured through evaluations or achievement of set goals.

Bonus Pay

Additional compensation given to employees as a reward for achieving specific performance targets or for exceptional work.

Job Performance

The level to which an employee successfully fulfills the roles, responsibilities, and tasks of their job.