Which of these gives the lowest effective rate of interest? A. 12.35 % compounded annually B. 11.90 % compounded annually C. 12.20 % compounded annually D. 11.60 % compounded annually

The answer is A. 12.35 % compounded annually.

Effective interest rate is the actual rate of interest paid or received on an investment, taking into account the effects of compounding. It is always greater than or equal to the nominal interest rate, which is the simple interest rate that is paid or received on an investment.

For example, if you invest \$100 at 12.35% compounded annually, your investment will be worth \$123.50 after one year. However, if you invest \$100 at 11.90% compounded annually, your investment will only be worth \$122.88 after one year. This is

Therefore, the option that gives the lowest effective rate of interest is A. 12.35 % compounded annually.