Final answer:
The effective annual rate (EAR) on a certificate of deposit (CD) with an annual percentage rate (APR) of 4.48% compounded monthly is approximately 4.570832%.
Step-by-step explanation:
The student is asking to calculate the effective annual rate (EAR) of a certificate of deposit (CD) that has an annual percentage rate (APR) of 4.48% compounded monthly. The formula to calculate the EAR is as follows: EAR = (1 + (APR/n))^n - 1, where n is the number of times interest is compounded per year.
In this case, the APR of 4.48% is compounded monthly, which means that n = 12. Using the formula, we get EAR = (1 + (0.0448/12))^12 - 1. Calculating this gives us an EAR of approximately 4.570832%, which is the actual return on investment over the course of a year, taking into account the effect of monthly compounding.