Question

If you are selecting between the best investment from two or more investments, the best choice is the account with the greatest _____, which is the ____ interest rate that produces the same amount of money at the end of one year as when the account is subject to compound interest at a stated rate
effective annual yield, simple

Answer 1

Answer:

The investment with greatest Effective Annual Yield will be selected because this effective annual yield is also known as Effective Interest Rate.

Explanation:

The effective annual yield is the annual return that we will earn. If the interest we are paid on deposit of $100 in bank account is $10 after a 365 days then the effective interest rate is 10% ($10/$100). So saying effective annual yield or effective interest rate is the same. In investment apraisal, we calculate effective interest rate to opt investments that has greatest effective annual yield.