A bank offers a money market account paying 4.9% interest compounded semiannually. A competing bank offers a money market account paying 4.8% interest compounded daily. Which account is the better investment?
Assume $1000 at 4.9% semi-annually = $1,049.60 Assume $1000 at 4.8% daily = $1,049.17
Let's try a bigger number $50'000 4.9% semi-annually $52,480.01 $50,000 4.8% daily = $52,458.37 It's a wash, the question is how long will you be investing, that might make a difference. I calculated 12 Millions over 6 years and bank A would be the better choice. Semi-annual compounded at 4.9%
