Which of the Following Bank Accounts Has the Lowest Effective

question 70

Multiple Choice

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.

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Definitions:

Customer Interest

The level of curiosity or concern that prospective buyers show towards a product or service, often a critical factor in marketing and sales strategies.

Advertising

The act of promoting products, services, or brands through various forms of media to inform, persuade, or remind consumers.

Promotional Activities

Promotional activities are marketing efforts designed to inform, persuade or remind target audiences about a product, service, or brand.

Decrease Retailer Prices

A reduction in the amount charged by retailers for goods or services, potentially to attract more customers or clear inventory.