Question: give short answer in 25 mins i will give thumb up 10. Banks usually quote saving rates using effective annual rate (EAR) and debt borrowing

give short answer in 25 mins i will give thumb up

10. Banks usually quote saving rates using effective annual rate (EAR) and debt borrowing rates using annual percentage rate (APR). If the 1-year fixed saving account has a 2.5% interest rate, calculate the "non-arbitrage" rate for a 1-year quarterly paid personal debt. In real life, do you expect the real debt rate would be higher or lower than this "non-arbitrage" rate? [8]

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