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42
An interest rate is 6% per annum with annual compounding. What is the equivalent rate with continuous compounding?
A.5.79%
B.6.21%
C.5.83%
D.6.18%
A.5.79%
B.6.21%
C.5.83%
D.6.18%
Answer: C
The equivalent rate with continuous compounding is ln(1.06) = 0.0583 or 5.83%.
Rc= mln(1+ Rm/m)
The equivalent rate with continuous compounding is ln(1.06) = 0.0583 or 5.83%.
Rc= mln(1+ Rm/m)
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015