Assume you have two rate quotations: an APR with monthly compounding and an EAR/EFF. Which of the following is CORRECT? Choose the best answer.

"EAR/EFF" is a shorthand to mean either the Effective Annual Rate (EAR) or the "effective" rate (EFF)--the two terms are interchangeable. Group of answer choices 1.) You can use the APR with annual cash flows, but you would need to divide the EAR/EFF by 12 to use it with monthly cash flows. 2.) You have to do an exponential calculation with the APR to use it with monthly cash flows, but you need to divide the EAR/EFF to use it with monthly cash flows. 3.) The APR can be directly used as the rate when you have annual cash flows; it is interchangeable with the EAR/EFF. 4.) You can never plug in the APR to use with annual cash flows, and you can never divide the EAR/EFF to use with monthlycashflows