What is the difference between daily and monthly compounding for a nominal interest rate of 7% per annum?
A)0.06%
B)0.04%
C)0.02%
D)0.01%

Name: What is the difference between daily and monthly compounding for a nominal interest rate of 7% per annum? A)0.06% B)0.04% C)0.02% D)0.01%
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Question

Quizplus · Accepted Answer

Daily compounding results in slightly more interest than monthly compounding due to more frequent application of interest. The difference between daily and monthly compounding for a 7% nominal rate is approximately 0.02%.

What Is the Difference Between Daily and Monthly Compounding for a Nominal