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An investor has the choice between two investments. Investment Exe offers interest of 4% per year compounded semi-annually for a period of three years. Investment Wye offers one interest payment of 20% at the end of its four-year life.
9. What is the annual effective interest rate offered by the two investments?
Investment Exe Investment Wye
A. 4.00% 4.66%
B. 4.00% 5.00%
C. 4.04% 4.66%
D. 4.04% 5.00%You can find an explanation in my reply to an earlier post on this here:
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