Choice A is the correct answer. Calculate the effective annual rate.

1. Formula: Effective rate = $(1 + \frac{r}{n})^n - 1$ where $r = 0.055$, $n = 4$.
2. Calculate: $(1 + \frac{0.055}{4})^4 - 1 = (1.01375)^4 - 1$.
3. Result: $(1.01375)^4 \approx 1.0561 - 1 = 0.0561 = 5.61\%$.

💡 Strategic Tip: Compounding more frequently than annually gives a higher effective rate.

Choice B is incorrect because this is the nominal rate, not effective. Choice C is incorrect because this is too high. Choice D is incorrect because the calculation doesn't match.