The investor will be indifferent between the two term deposits if their effective annual rates (EAR) are identical. For Term Deposit 1, the EAR is calculated as follows: $\text{EAR} = \left(1 + \frac{0.04}{4}\right)^4 - 1 = 0.040604$ For Term Deposit 2, the stated annual rate with continuous compounding must equate to this EAR. Therefore: $0.040604 = e^r - 1$ Solving for $r$: $r = \ln(1.040604) \approx 0.039801 \text{ or } 3.98\%$ Option B is correct because it accurately reflects the required stated annual rate for Term Deposit 2. Option A is incorrect as it uses the natural logarithm of the stated annual rate instead of the EAR. Option C is incorrect as it represents the EAR of Term Deposit 1, not the stated annual rate for Term Deposit 2.