An investment at 10% compounded continuously has an equivalent annual rate of:
A)10.250%.
B)10.517%.
C)10.381%.
D)none of the options.

Question

Quizplus · Accepted Answer

The equivalent annual rate for continuous compounding is given by the formula:EAR = e^r - 1where r is the continuously compounded rate.In this case, r = 10%, so:EAR = e^0.1 - 1 = 0.10517Therefore, the equivalent annual rate is 10.517%.

An Investment at 10% Compounded Continuously Has an Equivalent Annual