Consider two deposits of 1 at time zero.

- Let S1 be the accumulated value of the deposit in Bank A at time 1, and

- S2 be the accumulated value of the deposit in Bank B at time 2.

Both banks offer the same annual nominal rate of discount d, but

- Bank A offers an annual nominal rate of discount compounded quarterly, and

- Bank B offers the same annual nominal rate of discount compounded semiannually.

The discount rate compounded semi-annually is equivalent to an annual effective rate of interest i.

Given S1/S2 = (33/34)^4, calculate i.