Concept:The effective annual rate is the rate that gives the same final amount as a nominal rate compounded more frequently.Explanation:Let the nominal annual rate be r=5%=0.05, compounded quarterly.Quarterly rate = r/4=0.0125.Over one year (4 quarters), the growth factor is (1+0.0125)4.Compute: (1.0125)2=1.02515625, then (1.02515625)2=1.0509453369.Thus 1+i=1.050945, so i=0.050945 or 5.0945%.Rounded to one decimal place: 5.1%.Answer:5.1%