Use the Table for the Question(s) Below -The Effective Annual Rate (EAR) for a Savings Account with Structure

question 55

Multiple Choice

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:
$\begin{array} { l c c c c c c } \hline \text { Term } & \text { 1 year } & \text { 2 years } & \text { 3 years } & \text { 5 years } & \text { 10 years } & \text { 20 years } \\\hline \text { Rate } & & & & & & \\( \text { EAR\%) } & 5.00 \% & 4.80 \% & 4.60 \% & 4.50 \% & 4.25 \% & 4.15 \% \\\hline\end{array}$
-The effective annual rate (EAR) for a savings account with a stated APR of 4% compounded daily is closest to:

• A) 4.10%
• B) 4.08%
• C) 4.06%
• D) 4.00%

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