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Which of the following bank accounts has the lowest effective annual return?   a. An account that pays 7% nominal interest with daily (365-day) compounding.     b. An account that pays 7% nominal interest with monthly compounding.     c. An account that pays 8% nominal interest with daily (365-day) compounding.     d. An account that pays 8% nominal interest with annual compounding.     e. An account that pays 8% nominal interest with monthly compounding.

Which of the following bank accounts has the lowest effective annual return?   a. An account that pays 7% nominal interest with daily (365-day) compounding.     b. An account that pays 7% nominal interest with monthly compounding.     c. An account that pays 8% nominal interest with daily (365-day) compounding.     d. An account that pays 8% nominal interest with annual compounding.     e. An account that pays 8% nominal interest with monthly compounding.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Which of the following bank accounts has the lowest effective annual return?
  a. An account that pays 7% nominal interest with daily (365-day) compounding.  
  b. An account that pays 7% nominal interest with monthly compounding.  
  c. An account that pays 8% nominal interest with daily (365-day) compounding.  
  d. An account that pays 8% nominal interest with annual compounding.  
  e. An account that pays 8% nominal interest with monthly compounding.  
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