Monthly
Bimonthly
Quarterly
Annually
Answer is Right!
Answer is Wrong!
The correct answer is A. Monthly.
Here is a brief explanation of each option:
- Option A: Monthly. If the interest is compounded monthly, then the interest earned in each month is calculated on the principal amount plus the interest earned in the previous months. This means that the interest is compounded more frequently, and the total amount of interest earned over the year is greater.
- Option B: Bimonthly. If the interest is compounded bimonthly, then the interest earned in each two-month period is calculated on the principal amount plus the interest earned in the previous two-month period. This is less frequent than monthly compounding, but it is still more frequent than annual compounding.
- Option C: Quarterly. If the interest is compounded quarterly, then the interest earned in each quarter is calculated on the principal amount plus the interest earned in the previous quarter. This is less frequent than monthly or bimonthly compounding, but it is still more frequent than annual compounding.
- Option D: Annually. If the interest is compounded annually, then the interest earned in each year is calculated on the principal amount only. This is the least frequent type of compounding, and it results in the lowest total amount of interest earned over the year.
In the case of Mandarin Bank, the interest is compounded monthly. This is because the annual yield of 9.84% is higher than the annual interest rate of 9.5%. This means that the interest is being compounded more frequently than once a year, and the total amount of interest earned over the year is greater.