5.2.2 Spot the highest Annual Equivalent Rate (AER)
This quiz tests your ability to spot the highest Annual Equivalent Rate (AER).
Activity 1
Suppose that a savings account advertises an annual interest rate of 5%, with interest payable either daily, weekly, monthly or annually.
Which account will have the highest AER?
Answer
Table 3 AER for a range of interest payment periods
| Advertised rate | 5% | |
|---|---|---|
| Period rate | AER | |
| Daily | 0.0137% | 5.127% |
| Weekly | 0.0962% | 5.125% |
| Monthly | 0.4167% | 5.116% |
| Quaterly | 1.2500% | 5.095% |
| Annually | 5.0000% | 5.0000% |
OpenLearn - Managing my money
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