A sum of ₹ 10,000 is to be invested for 2 years. Which of the following method of compound interest…
For the same nominal annual rate of 12%, more frequent compounding yields a higher effective interest rate: \((1.01)^{24} > (1.03)^8 > (1.06)^4 > (1.12)^2\). Thus 1% per…
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A sum of ₹ 10,000 is to be invested for 2 years. Which of the following method of compound interest will give highest interest?
Answer and explanation
Correct answer A
For the same nominal annual rate of 12%, more frequent compounding yields a higher effective interest rate: . Thus 1% per month compounded monthly gives the highest interest.
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