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(Calculating anEAR) Your grandmother asks for your help in choosing a certificate of deposit(CD) from a bank with aone-year maturity and a fixed interest rate.

(Calculating anEAR)Your grandmother asks for your help in choosing a certificate of deposit(CD) from a bank with aone-year maturity and a fixed interest rate. The first certificate ofdeposit, CD#1, pays 2.95 percent APR compounded semiannually, while the second certificate ofdeposit, CD#2, pays 3.00 percent APR compounded quarterly. What is the effective annual rate(the EAR) of eachCD, and which CD do you recommend to yourgrandmother?

If the first certificate ofdeposit, CD#1, pays 2.95 percent APR compounded semiannually, the EAR for the deposit is

2.97

2.97%. (Round to two decimalplaces.)

If the second certificate ofdeposit, CD#2, pays 3.00 percent APR compounded quarterly, the EAR for the deposit is

nothing

%. (Round to two decimalplaces.)

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