If a bank pays 2 percent compounded daily, the true rate of interest is greater than 2 percent.

Name: If a bank pays 2 percent compounded daily, the true rate of interest is greater than 2 percent.
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When interest is compounded daily, the effective annual rate is higher than the nominal rate due to the addition of interest to the principal on a daily basis, leading to interest on interest.

If a Bank Pays 2 Percent Compounded Daily, the True