In the Last 3 Years, Mutual Fund a Grew at the Rate

question 95

Essay

In the last 3 years, mutual fund A grew at the rate of 10.5%/year compounded quarterly. Over the same period, mutual fund B grew at the rate of 10.6%/year compounded semi-annually. Which mutual fund has a better rate of return? (Answer A or B.)

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Definitions:

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another.

Opportunity Cost

The worth of the best alternative that is given up to make a decision.

Calculations

The process of determining the result of mathematical or logical operations or expressions.

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