Anna’s bank gives her a loan with a stated interest rate of 10.22%. How much greater will Anna’s effective interest rate be if the interest is compounded daily, rather than compounded monthly?

Use the effective annual rate formula: (1 + 0.1022/n)^n − 1, where n is the number of compounding periods per year. With daily compounding (n = 365), the rate is about 10.758%; with monthly compounding (n = 12), it is about 10.712%. The difference is about 0.0463 percentage points, so the correct choice is “0.0463 percentage points.”

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