If the effective annual interest rate is 10% and interest is continuously compounded, what is the nominal annual interest rate?
A)9.00%
B)9.53%
C)10.53%
D)11.53%
E)12.53%

Question

Quizplus · Accepted Answer

The nominal annual interest rate when interest is continuously compounded can be found using the formula for the effective annual rate (EAR) = e^(r) - 1, where r is the nominal rate. Given an EAR of 10% or 0.10, we solve for r: e^(r) - 1 = 0.10. Solving for r gives approximately 9.53%.

If the Effective Annual Interest Rate Is 10% and Interest