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Consider two investments over five years with the same initial investment (PV). The first earns a nominal annual rate of interest of 5% for the
Consider two investments over five years with the same initial investment (PV). The first earns a nominal annual rate of interest of 5% for the first two years and 6% for the following three years, with quarterly compounding. The second investment earns interest at a constant rate over the five years. If the compound amount of each investment is the same at the end of five years, the effective annual rate of interest for the investment is:
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