Which of the following bank accounts has the lowest effective annual return a

Question

Which of the following bank accounts has the lowest effective annual return?

a. An account that pays 8% nominal interest with daily (365-day) compounding.

b. An account that pays 8% nominal interest with monthly compounding.

c. An account that pays 8% nominal interest with annual compounding.

d. An account that pays 7% nominal interest with daily (365-day) compounding.

e. An account that pays 7% nominal interest with monthly compounding.

Answer

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