Would compounded semiannually or compounded annually

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Question 1: Would you rather receive 6.25% compounded annually or 6.11% compounded semiannually?

Option 1: 6.25% annually because it gives a higher return than 6.11% compounded semiannually which is 6.2% on an annual basis.

Option 2: 6.11% compounded semiannually because it gives a higher return at 12.22% on an annual basis.

Option 3: You would be indifferent because they will give the same return over time

Option 4: 6.11% compounded semiannually because it is always better to have compounding more frequently

Reference no: EM132652229

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