The effective annual rate for a continuously compounded 6.0% APR is about 6.184%.

Name: The effective annual rate for a continuously compounded 6.0% APR is about 6.184%.
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

The formula for the effective annual rate for continuously compound interest is e^r - 1, where r is the annual interest rate in decimal form. Plugging in 0.06 for r, we get e^0.06 - 1 ≈ 0.06184, or about 6.184%. Therefore, the statement is true.

The Effective Annual Rate for a Continuously Compounded 6