Answer
The statement does not make sense.
Work Step by Step
The effective annual yield is the rate of simple interest which would earn the same amount of interest as the specified rate of compound interest. The effective annual yield is always higher than the specified rate of compound interest.
If the rate of compound interest is 3.25%, then the effective annual yield will be higher than this rate. Therefore, the bank offering 3.25% compound interest must be a better investment than the bank offering 3.25% simple interest.
