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k. Five banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and
k. Five banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 4. Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently. k. Five banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 4. Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently
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