Answer
$ 5.095 \%$
Work Step by Step
Recall:
Effective Rate of Interest Formula
$$r_e = \left(1+\dfrac{r}{n} \right)^n - 1$$
where
$r_e:$ Effective Rate of Interest
$r:$ Annual Interest Rate
$n:$ Number of compoundings per year
The given problem has:
$r = 0.05$
$\text{Compounded quarterly} \to n = 4$
Thus, using these given values and the formula above gives:
$r_e = \left(1+\dfrac{0.05}{4} \right)^4 - 1$
$r_e \approx 0.05095$
$r_e \approx 5.095 \%$
