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:

International Sale

The transaction of goods or services across national borders, subject to international trade laws and regulations.

Issuer

The entity that develops, registers, and sells securities to finance its operations.

Beneficiary

A person or entity entitled to receive benefits from a trust, will, or life insurance policy.

United Nations Convention

An international treaty formulated and adopted by the United Nations and its member states, focusing on specific areas of law or social concern.