If the nominal annual interest rate is 10% and interest is continuously compounded, what is the effective annual interest rate?
A)9%
B)9.52%
C)10.52%
D)11%
E)11.52%

Question

Quizplus · Accepted Answer

The effective annual interest rate for continuous compounding is calculated using the formula: $ e^r - 1 $, where $ r $ is the nominal rate. For a 10% nominal rate, it is $ e^{0.10} - 1 \approx 0.1052 $ or 10.52%.

If the Nominal Annual Interest Rate Is 10% and Interest