question 4 of 5 select the correct answer from each drop - down menu. consider these account options. then…

Explanation:

Step1: Recall compound - interest formula

The effective - annual - rate (EAR) formula is $EAR=(1 + \frac{r}{n})^{n}-1$, where $r$ is the annual interest rate and $n$ is the number of compounding periods per year.

Step2: Calculate EAR for Account 1

For Account 1, $r = 0.03$ and $n = 1$. So, $EAR_1=(1+\frac{0.03}{1})^{1}-1=0.03 = 3.00%$.

Step3: Calculate EAR for Account 2

For Account 2, $r = 0.0325$ and $n = 12$. Then $EAR_2=(1+\frac{0.0325}{12})^{12}-1\approx(1 + 0.0027083)^{12}-1\approx1.0329 - 1=0.0329\approx3.29%$.

Step4: Calculate EAR for Account 3

For Account 3, $r = 0.0310$ and $n = 52$. So, $EAR_3=(1+\frac{0.0310}{52})^{52}-1\approx(1+0.0005962)^{52}-1\approx1.0315 - 1 = 0.0315=3.15%$.

Step5: Calculate EAR for Account 4

For Account 4, $r = 0.0315$ and $n = 365$. Then $EAR_4=(1+\frac{0.0315}{365})^{365}-1\approx(1 + 0.0000863)^{365}-1\approx1.0320 - 1=0.0320 = 3.20%$.

Answer:

Account 2 yields the highest annual interest rate at approximately 3.29% (closest option in the list is 3.30%). So the answer is 3.30%.