First Bank offers personal loans at 7.7 percent compounded monthly. Second Bank offers similar loans at 7.4percent compounded daily. Which one of the following statements is correct concerning these loans? Assume a 365-day year.

The First Bank loan has an effective rate of 7.98 percent. The Second Bank loan has an effective rate of 8.01 percent. The annual percentage rate for the Second Bank loans is 7.68 percent. Borrowers should prefer the loans offered by First Bank. Both banks offer the same effective rate.