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A life insurance company pays investors 4% compounded annually on its five-year GICs. For you to...

  1. A life insurance company pays investors 4% 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?                                          (Total: 8 marks)

Interim calculations should be to 5 decimal places; final answer to the nearest .01%

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