Bank A offers to lend you $10,000 at a nominal rate of 7%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Bank B also offers to lend you the $10,000, but it will charge 8%, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks?
a. 0.77%
b. 1.71%
c. 1.10%
d. 1.59%
e. 0.91%