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Answer to Question #248689 in Financial Math for RONA MAE
Question #248689
Two equal investments are made with the same interest rate; however, one is at simple interest
rate and the other one is at compounding interest rate (quarterly). Which of the two equal
investments will generate a bigger interest for one year?
rate and the other one is at compounding interest rate (quarterly). Which of the two equal
investments will generate a bigger interest for one year?
Expert's answer
One that is at Compound interest rate since coumpound interest is earned not only on the original principal, but also on all interests earned previously.
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