The effective annual rate with continuous compounding is expressed as EAR=:

A) [(1) (APR) (m) ]^m- 1.
B) [1 + (Quoted rate) /m]^m-1.
C) [1 - Quoted rate/m]^m[r].
D) e^q- 1.
E) (E) (q) - 1.

Question

The effective annual rate with continuous compounding is expressed as EAR=:A)  [(1)  (APR)  (m) ] m - 1.B)  [1 + (Quoted rate) /m] m -1.C)  [1 - Quoted rate/m] m [r].D)  e q - 1.E)  (E)  (q)  - 1.

Zybrea Knight · Accepted Answer

Final Answer : D, Explanation :   The effective annual rate (EAR) with continuous compounding is expressed as   E A R = e r − 1 EAR = e^{r} - 1 E A R = e r − 1  , where   e e e   is the base of the natural logarithm (approximately 2.71828), and   r r r   is the annual interest rate. This formula accounts for the fact that interest is being compounded continuously throughout the year.

The effective annual rate with continuous compounding is expressed as EAR=:

A) [(1) (APR) (m) ]^m- 1.
B) [1 + (Quoted rate) /m]^m-1.
C) [1 - Quoted rate/m]^m[r].
D) e^q- 1.
E) (E) (q) - 1.

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Related questions

The effective annual rate with continuous compounding is expressed as EAR=:A) [(1) (APR) (m) ]m- 1.B) [1 + (Quoted rate) /m]m-1.C) [1 - Quoted rate/m]m[r].D) eq- 1.E) (E) (q) - 1.

Definitions

Learning Objectives

Learning Objectives

Related questions

The effective annual rate with continuous compounding is expressed as EAR=:

A) [(1) (APR) (m) ]^m- 1.
B) [1 + (Quoted rate) /m]^m-1.
C) [1 - Quoted rate/m]^m[r].
D) e^q- 1.
E) (E) (q) - 1.