Which of the Following Bank Accounts Has the Highest Effective

question 52

Multiple Choice

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.

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Definitions:

Cortex

The outer layer of the cerebrum of the mammalian brain, involved in higher brain functions such as thought and action.

Thalamus

A brain structure that processes and relays sensory information to the appropriate areas of the brain.

Neurons

Specialized cells that convey nerve signals, serving as the fundamental components of the nervous system.

Nerves

Bundles of axons coated in myelin that travel together through the body.