Which of the following investments has the highest effective annual re
Which of the following investments has the highest effective annual return (EAR)? (Assume that all
CDs are of equal risk.)
A) a bank CD that pays 7.10 percent compounded monthly
B) a bank CD that pays 7.30 percent annually
C) a bank CD that pays 7.25 percent compounded semiannually
D) a bank CD that pays 7.00 percent interest compounded daily
ANSWER
C
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