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Suppose that Bank D offers Lisa a deposit account of interest at 11% per annum, interest is compounded and payable half-yearly. In competing for the

Suppose that Bank D offers Lisa a deposit account of interest at 11% per annum, interest is compounded and payable half-yearly. In competing for the deposit, Bank E offers Lisa interest at 10.8% p.a., but compounded and payable monthly.

(i) Calculate the effective annual rate (EAR) of each Bank. (ii) Refer to Part A, Lisa has $100,000 in cash today, which bank she should put in the deposit? Explain.

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