Q3: Which one of the following two cases would you prefer as more profitable investment and why? Case 1: Deposit £5000 for two years in a saving account that pays simple interest at rate of 6% per annum. No withdrawal during the investment period. Case 2: Deposit £5000 for one year in a savings account that pays simple interest at rate of 6% per annum. Then, withdraw the money with interest and deposit into another account paying simple interest at 7.5% for one year. Case 1 because of higher return of £6600 Case 1 because of higher return of £5697.5 Case 2 because of higher return of £5697.5 Case 2 because of higher return of £6600
Q3: Which one of the following two cases would you prefer as more profitable investment and why? Case 1: Deposit £5000 for two years in a saving account that pays simple interest at rate of 6% per annum. No withdrawal during the investment period. Case 2: Deposit £5000 for one year in a savings account that pays simple interest at rate of 6% per annum. Then, withdraw the money with interest and deposit into another account paying simple interest at 7.5% for one year. Case 1 because of higher return of £6600 Case 1 because of higher return of £5697.5 Case 2 because of higher return of £5697.5 Case 2 because of higher return of £6600
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Q3: Which one of the following two cases would you prefer as more profitable investment and
why?
Case 1: Deposit £5000 for two years in a saving account that pays simple interest at rate of 6%
per annum. No withdrawal during the investment period.
Case 2: Deposit £5000 for one year in a savings account that pays simple interest at rate of 6%
per annum. Then, withdraw the money with interest and deposit into another account paying
simple interest at 7.5% for one year.
Case 1 because of higher return of
£6600
Case 1 because of higher return of
£5697.5
Case 2 because of higher return of
£5697.5
Case 2 because of higher return of
£6600
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