Two standard savings accounts A and b have an AER of 3%. Account A pays interest every quarter and account b every month. Work out whether the interest paid at the end of the year is higher for account A, for account B or the same for both accounts, assuming the same amount was invested in each account initially
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Two standard savings accounts A and b have an AER of 3%. Account A pays interest every quarter and account b every month. Work out whether the interest paid at the end of the year is higher for account A, for account B or the same for both accounts, assuming the same amount was invested in each account initially
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