Answer to Question #37684 in Statistics and Probability for KC

Question

7. Which of the following bank accounts has the highest effective annual return?

a. An account that pays 8% nominal interest with monthly compounding.
b. An account that pays 8% nominal interest with annual compounding.
c. An account that pays 7% nominal interest with daily (365-day) compounding.
d. An account that pays 7% nominal interest with monthly compounding.
e. An account that pays 8% nominal interest with daily (365-day) compounding.

Answer 1

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