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Daily vs. Monthly Compounding

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

© BrainMass Inc. brainmass.com July 17, 2018, 12:24 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.

$2.19