Assume the inflation rate is 2.31% APR, compounded annually. Would you rather earn a nominal return of 5.78% APR, compounded semiannually, or a real return of 2.95% APR, compounded quarterly? To put these on the same basis, you must convert them both to nominal EARs.
A. The EAR for the 5.78% APR compounded semiannually is? (Round to 6 decimal places)
B. The nominal EAR for a real 2.95% APR compounded quarterly is? (Round to 6 decimal places)
C. Which would you rather earn?