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A money manager has$1,000,000 to invest for one year. She has identified two alternative one-year certificates of deposit (CD) shown below: | Compounding frequency |

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A money manager has$1,000,000 to invest for one year. She has identified two alternative one-year certificates of deposit (CD) shown below: | Compounding frequency | Annual interest rate CD1 Quarterly 4.00% CD2 Continuously 3.50% Which CD has the highest effective annual rate (EAR) and how much interest will it earn? Highest EAR Interest earned CD1 $41,902 CD1 $40,604 CD2 $50,700

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