1. Edmonton Bank offers to lend you $10,000 at a nominal rate of 6.3%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Calgary Bank also offers to lend you the $10,000, but it will charge an annual rate of 6.4%, with no interest due until the end of the year. What is the difference in the effective annual rates charged by the two banks?

The correct answer is 0.09%, please explain how to calculate in depth with explained and clear formulas. Finance formulas.