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5. Bank A pays 4% interest compounded annually on deposits, while Bank B pay 3.5% compounded daily. Based on the EAR (or EFF%), which bank

5. Bank A pays 4% interest compounded annually on deposits, while Bank B pay 3.5% compounded daily. Based on the EAR (or EFF%), which bank should you use? Explain (hint: calculate each EAR and then compare two EARs.)

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