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An investor has the choice between two investments. Investment X offers interest of 4% per year compounded semi annually for a period of three years. Investment Y offers one intrest payment of 20% at the end of its four-year life.
What is an annual effective interest rate??
Investment X Investment Y
A) 4.00% 4.66%
B) 4.00% 5.00%
C) 4.04% 4.66%
D) 4.04% 5.00Correct answer is C please guide
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