Final answer:
The statement is true; accounts with daily compounded interest will grow faster than those with monthly compounded interest due to the frequency of compounding, allowing interest to be earned on previously accrued interest more often.
Step-by-step explanation:
The statement that accounts that compound daily interest faster than those that compound monthly is true. When interest is compounded more frequently, such as daily instead of monthly, it is applied to the balance more often, thus accruing more interest over the same period. In the context of financial savings and investments, this means that an account that compounds interest daily will grow at a faster rate than one that compounds monthly, assuming the same annual interest rate for both accounts.
The concept of compound interest is fundamental to the growth of investments. This is because each time interest is compounded, it is not only the initial principal that earns interest, but also the previously earned interest. This creates a compound growth effect, where growth takes place at an exponential rate over time. As a result, accounts favor more frequent compounding periods, given the same interest rate.