Which of the Following Bank Accounts Has the Lowest Effective

question 31

Multiple Choice

Which of the following bank accounts has the lowest 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:

Disjunction

A logical operation that yields true if at least one of its operands is true, typically expressed through the use of "or" in statements.

Disjuncts

The separate elements or options in a disjunctive proposition, any of which can make the entire proposition true.

Disjunction

A logical operation yielding a true value if at least one of its propositions is true.

Biconditional

A logical relationship between two statements where both or neither are true; often phrased as "if and only if".