Asked by Margaret Everett on Jul 02, 2024
Verified
What is the effective annual rate of 14.9% compounded continuously?
A) 15.96%
B) 16.01%
C) 16.05%
D) 16.07%
E) 16.17%
Compounded Continuously
The process whereby interest is calculated on an initial principal and subsequently on the accumulated interest of previous periods, assuming the compounding occurs infinitely within a given time.
Effective Annual Rate
The actual interest rate an investment, loan, or savings account will yield after accounting for compounding.
Rate
The percentage or proportion of a specific quantity or value, often used in contexts like interest rates, return rates, or growth rates.
- Acquire knowledge on the Effective Annual Rate (EAR) concept and its calculation process.
- Employ comprehension of continuously compounded interest in analyzing investment development.
Verified Answer
Learning Objectives
- Acquire knowledge on the Effective Annual Rate (EAR) concept and its calculation process.
- Employ comprehension of continuously compounded interest in analyzing investment development.
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