Finance

12. (Related to Checkpoint 5.7) (Calculating an EAR) Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank with a one-year maturity and a fixed interest rate. The first certificate of deposit, CD #1, pays 4.95 percent APR compounded semiannually, while the second certificate of deposit, CD #2, pays 5.00 percent APR compounded weekly. What is the effective annual rate (the EAR) of each CD, and which CD do you recommend to your grandmother? If the first certificate of deposit, CD #1, pays 4.95 percent APR compounded semiannually, the EAR for the deposit is %. (Round to two decimal places.) If the second certificate of deposit, CD #2, pays 5.00 percent APR compounded weekly, the EAR for the deposit is %. (Round to two decimal places.) Based on the findings above, which CD do you recommend to your grandmother? (Select the best choice below.) O A. CD #2 that pays 5.00% compounded weekly OB. CD #1 that pays 4.95% compounded semiannually