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    Daily vs. Monthly Compounding

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    I need an explanation how to resolve this question or an example

    © BrainMass Inc. brainmass.com June 4, 2020, 4:37 am ad1c9bdddf

    Solution Preview

    Please see the calculations in the attached Excel sheet.

    Given the same nominal rate, more frequent compounding will always result in a higher effective rate, because ...

    Solution Summary

    We compare daily and monthly compounding, showing the exact calculations for each and which results in a higher effective rate.