Question: You have decided to visit 4 banks that are offering savings accounts. The first bank offers you a rate of 10% per annum compounded annually.
a. What rate would the second bank have to offer you using monthly compounding that would make you indifferent between which accounts you put your money in?
b. What rate would the third bank have to offer you using daily compounding that would make you indifferent between which accounts you put your money in?
c. What rate would the fourth bank have to offer you using continuous compounding that would make you indifferent between which accounts you put your money in?