#### Explanation:

When the interest compounded quarterly, we will get interest 4 times in a year and interest percent will become 1/4 times.

Here, Investment (P) = $1, Year ( n) = 1 x 4 = 4 Rate of interest (r) = 3.5 x 1/4 . We have to calculate the yield. We know, Here A = P[1+(r/4)/100]^(nxx 4)} [where A = Investment + Interest or yield] So, Yield = A - P $\Rightarrow P {\left[1 + \frac{\frac{r}{4}}{100}\right]}^{n \times 4} - P$$\Rightarrow P \left[{\left\{1 + \frac{3.5}{400}\right\}}^{1 \times 4} - 1\right]$$\Rightarrow 1 \left[{\left\{1 + \frac{7}{800}\right\}}^{4} - 1\right]$$\Rightarrow {\left\{\frac{807}{800}\right\}}^{4} - 1$$\Rightarrow 1.035462 - 1$$\Rightarrow 0.035\$