May Wattson has 50000 to invest in a 4-year certificate of deposit that earns an interest rate of 3.75% compounded monthly or 3.50% compounded daily. Based on annual yield which is the better investment?

Answer 1

The first part of the question is irrelevant.

all we need is to compare 3.76% compounded monthly with 3.5% compounded daily

let the first rate be i
1+i = (1 + .0376/12)^12 = 1.038254..
i = appr 3.825%

let the second rate be j
1+j = (1 + .035/365)^365 = 1.0356..
= appr 3.56%

take over