Jennifer and Rex both receive a dividend from their 401(k) retirement plan every 6 months. The earning rates for this year have been 5% per year, compounded quarterly for Jennifer, and 4.85% per year, compounded monthly for Rex. Rex felt good about this because he knew the monthly comÂpounding on his plan would make his APY higher than Jennifer’s APY.
(a) Is Rex correct? Explain your answer.
(b) What is the effective rate for each plan on the basis of the payment period?
(a) Rex is not correct since his effective rate is less than that for Jennifer
(b) Effective rates per 6-months are shown in column O.
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Answer the following statement true (T) or false (F)