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A life insurance company pays investors 5% compounded annually on its five-year GICs. For you to be indifferent as to which compounding option you choose,

A life insurance company pays investors 5% compounded annually on its five-year GICs. For you to be indifferent as to which compounding option you choose, what would the nominal rates have to be on GICs with:

a) Semiannual compounding?

b) Quarterly compounding?

c) Monthly compounding?

Calculate interest rates accurate to the nearest 0.01%.

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