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Bunk A pays 6% interest compounded annually on deposits, while Bank B pays 5.75% compounded daily a. Based on the EAR. (or EFFW), which bank

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Bunk A pays 6\% interest compounded annually on deposits, while Bank B pays 5.75% compounded daily a. Based on the EAR. (or EFFW), which bank should you use? 1. You would choose Bank A becouse its EAR is higher. 11. You would choose bank B because its EAR is higher. III. You would choose Bank A because its nominal interest rate is higher. IV. You would choose Bank 8 because its nominat interest rate is higher. V. You are indifferent between the banks and vour decision will be based upon which one offers you a gift for opening an account. b. Could your choice of banks be infuenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest. 1. If Nunds must be left on deposit until the end of the compounding penod (1 Year for Bank A and 1 day for Bank B), and you think there is a high probabilty that you will make a withdrawal durng the year, then Bank. A might be preferable. 11. If funds must be left on depost until the end of the compounding penod (1 year for Bank A and 1 dey for Bank B), and you have no intentions of making a withdrawal during the year, then bank is might be preterable. 11. If finds must be left on deposit until the end of the compounding penod ( 1 day for Bank A and 1 year for Bank B ), and you think there is a high probability that you will make a withdrawal during the year, then Bank B might be preferable. IV. If funds must. be left on deposit untli the end of the compounding period ( 1 year for Bank A and 1 doy for Bank B), and you think there is a high probabibty that you will make a withdrawa daring the year, then Bank B might be preterable. . If funds must be left on deposit until the end of the compounding period ( 1 day for Bank A and 1 year for Bank B), and you think there is a high probability that you will make a withdrawal during the year, then bank A might be preferable

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