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Your grandmother asked for your help in choosing a certificate of deposit (CD) from a bank with a three-year maturity and a fixed interest rate.

Your grandmother asked for your help in choosing a certificate of deposit (CD) from a bank with a three-year maturity and a fixed interest rate. The first security, CD#1, pays an annual rate of 5.00 percent compounded quarterly, while the second security, CD#2, pays an annual rate of 4.95 percent compounded monthly. Which CD do you recommend to your mother?

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