1. Which of the following statements is true?

a. If interest is compounded more than once a year, the nominal annual rate is greater than the effective annual rate.

b. If interest is compounded once a year, the nominal annual rate and the effective annual rate are equal.

c. If interest is compounded more than once a year, the effective annual rate is greater than the nominal annual rate.

d. (a) and (b) are both correct.

e. (b) and (c) are both correct.