If interest is at 8% and it is compounded continuously, what is the effective interest rate?
A) 7.25%
B) 5.14%
C) 8.33%
D) 9.76%

Name: If interest is at 8% and it is compounded continuously, what is the effective interest rate? A) 7.25% B) 5.14% C) 8.33% D) 9.76%
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Question

Quizplus · Accepted Answer

The effective interest rate for continuous compounding is calculated using the formula e^r - 1, where r is the nominal rate. For 8%, it is e^0.08 - 1 ≈ 0.0833 or 8.33%.

If Interest Is at 8% and It Is Compounded Continuously