Which of the following provides the greatest annual yield? Answer 14.7% compound

Question

Which of the following provides the greatest annual yield? Answer 14.7% compounded monthly. 14.6% compounded weekly. 14.9% compounded semi-annually. 14.8% compounded quarterly. 15% compounded annually. Which of the following provides the greatest annual yield? Which of the following provides the greatest annual yield? 14.7% compounded monthly. 14.6% compounded weekly. 14.9% compounded semi-annually. 14.8% compounded quarterly. 15% compounded annually. 14.7% compounded monthly. 14.6% compounded weekly. 14.9% compounded semi-annually. 14.8% compounded quarterly. 15% compounded annually.

Explanation / Answer

14.7% compounded monthly.

EAR = (1+r/n)^n-1

ie EAR = (1+14.7%/12)^12-1 = 15.73%

14.6% compounded weekly.

EAR = (1+14.6%/52)^52-1 = 15.70%

14.9% compounded semi-annually.

EAR = (1+14.9%/2)^2-1 = 15.46%

14.8% compounded quarterly.

EAR = (1+14.8%/4)^4-1 = 15.64%

15% compounded annually.

EAR = (1+15%/1)^1-1 = 15%

SO 14.7% monthly gives highest Return

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