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QUESTION

A life insurance company pays investors 5% compounded annually on its five-year GICs.

A life insurance company pays investors 5% compounded annually on its five-year GICs. For you to be indifferent as to which compounding option you choose, what would the nominal rates have to be on GICs with quarterly compounding? Interim calculations should be to 5 decimal places; final answer to the nearest .01%

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