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An interest rate is 7.50% per annum with annual compounding. What is the equivalent rate with...

An interest rate is 7.50% per annum with annual compounding. What is the equivalent rate with continuous compounding? (Answer is in percentage with two decimal place - example 5.35)

Solutions

Expert Solution

EAR = e^q − 1

EAR = e^0.0750 − 1

EAR = 0.0779 or 7.79%

jeff jeffy answered 3 years ago
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