The big idea: In IB finance questions, 'better' does not mean 'looks nicer'. It means better for the specific goal in the question: larger final value, smaller cost, faster growth, or some other stated criterion.
| Question wording | What you should compare |
|---|---|
| Which investment is better? | Final value after the same time |
| Which loan is cheaper? | Total paid or remaining balance |
| Which account grows faster? | Value after a stated period |
| Which option should the saver choose? | Mathematics plus a final contextual decision |
Always use the criterion in the question: If the question asks which option gives the larger amount after 5 years, compare the 5-year values. Do not switch to a different criterion.
Quick recognition example
A question asks which account is better for a student who wants the largest balance after 3 years. What should be compared?
Step by step
- The goal is the largest balance after 3 years.
- So calculate the value of each account after 3 years and compare them.
Final answer
Compare the final balances after 3 years.
Worked example
A saver invests $2 500 in Account A at 4.5% compounded yearly, or Account B at 4.4% compounded monthly. Which is better after 4 years?
Step by step
- Account A:
- Account B:
- Compare the final values.
Final answer
Account B is better because it gives the larger balance after 4 years.
The comparison sentence matters: Do not stop after two calculations. IB comparison marks usually depend on a clear final sentence such as 'Account B is better because...'.
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The big idea: Some finance questions try to distract you by changing more than one thing at once: rate, deposit, or compounding frequency. You must compare the values that answer the question, not just one attractive-looking feature.
| Option | What looks attractive | What you must actually compare |
|---|---|---|
| Higher rate but smaller deposit | The percentage rate | Final balance |
| Same deposit but different k | Compounding frequency | Final balance |
| Larger deposit but lower rate | Starting amount | Final balance after the same time |
Worked example — different starting amounts
Option A starts with 5 400 at 3% compounded yearly. Which is larger after 3 years?
Step by step
- Option A:
- Option B:
- Compare the two results.
Final answer
Option B is larger after 3 years, even though its rate is lower, because it started with more money.
| Weak answer | Why it loses marks | Better answer |
|---|---|---|
| B is better. | No evidence given | B is better because its final value is $2981.16 compared with $2973.88 for A. |
| A = 5624.32, B = 5900.85 | No actual conclusion | B gives the larger balance, so it is the better option for this saver. |
A finance conclusion should sound like a decision: The best final line sounds like advice based on mathematics: 'Option B should be chosen because it gives the larger balance after 3 years.'
Mini conclusion practice
Suppose Option X gives 8 611 after 5 years. Write the final sentence.
Step by step
- State which is larger.
- Turn that into a contextual conclusion.
Final answer
Option Y is better because it gives the larger final amount after 5 years.