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2. What is the purpose of calculating the effective annual rate? In what situation(s) is it useful? How does the APR differ from the EAR?

2. What is the purpose of calculating the effective annual rate? In what situation(s) is it useful? How does the APR differ from the EAR?

3. What is the difference between interest rate risk and reinvestment rate risk? For each, under what conditions is each more of a concern?

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