Suppose that you make a fixed deposit of $1,000 in Bank X and $500 in Bank Y. The value of each investment at the end of each subsequent year is provided in the table.
?
Year
Bank X ($)
Bank Y ($)
1
1,320
560
2
1,510
620
3
1,750
680
4
2,090
740
5
2,240
790
6
2,470
820
7
2,830
870
8
3,220
910
9
3,450
950
10
3,690
990
?
Which of the two banks provides a better return over this time period?
What will be an ideal response?
?a.?
| Year | Bank X | Growth Factor | Bank Y | Growth Factor |
| 1,000 | 500 | |||
| 1 | 1,320 | 1.32 | 560 | 1.12 |
| 2 | 1,510 | 1.14 | 620 | 1.11 |
| 3 | 1,750 | 1.16 | 680 | 1.10 |
| 4 | 2,090 | 1.19 | 740 | 1.09 |
| 5 | 2,240 | 1.07 | 790 | 1.07 |
| 6 | 2,470 | 1.10 | 820 | 1.04 |
| 7 | 2,830 | 1.15 | 870 | 1.06 |
| 8 | 3,220 | 1.14 | 910 | 1.05 |
| 9 | 3,450 | 1.07 | 950 | 1.04 |
| 10 | 3,690 | 1.07 | 990 | 1.04 |
| Geometric Mean | 1.1395 | Geometric Mean | 1.0707 | |
| % of return | 13.95% | % of return | 7.07% |
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