What is the nominal annual interest rate if the effective annual rate is 11% and compounding is continuous? a. 8.49% b. 10.44% c. 9.20% d. 9.45% e. 11.86%
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The formula for EAR is: EAR = (1 + r/n)^n - 1 Where r is the nominal annual interest rate and n is the number of compounding periods per year. In this case, compounding is continuous, which means that n approaches infinity. As n approaches infinity, the formula Show more…
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