Assume inflation is 0.17% per month. Would you rather earn a nominal return of 0.7% per month, compounded monthly, or a real return of 6.55% APR, compounded annually?

(Note:Be careful not to round any intermediate steps less than six decimal places.)

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Part 1

The annual rate for the nominal return of

0.73%

per month is

(Type your answer in decimal format. Round to six decimal places.)

Part 2

The nominal annual rate for the real return of

6.55%

APR is

Part 3.(Select from the drop-down menus.)

Based on a comparison of the two rates and the current inflation rate, you would prefer the real return compounded annually option over the _________option.