d) Suppose you are looking at various offers for borrowing from two different banks. The first bank offers 6.40% rate compounded semi-annually while the second offers you a lower rate of 12% but compounds interest weekly. Without considering any other fees at this time, which offer has better terms? [20 marks] e) An investment over three-year horizon is distributed as follows: 50% return over the first year, -30% return over the second year and then -11% in the third year. Calculate the arithmetic average and the geometric average over three years. What do you observe? [20 marks] 1