Which of the following bank accounts has the highest 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.


Answer: A

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