An Interest Rate Is 5% Per Annum with Continuous Compounding

question 18

Multiple Choice

An interest rate is 5% per annum with continuous compounding.What is the equivalent rate with semiannual compounding?

• A) 5.06%
• B) 5.03%
• C) 4.97%
• D) 4.94%

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Definitions:

Nonrestrictive

Used to describe modifiers, especially clauses, that provide additional information without limiting or defining the subject.

Restrictive Clause

A clause that limits or defines more closely the subject it modifies, essential to the meaning of the sentence.

Tex-Mex

A cuisine that combines elements of Mexican and Texan food, known for its use of melted cheese, meat, and spices.

Guacamole

Guacamole is a traditional Mexican dip made from mashed avocados, onions, tomatoes, and seasoning, often enjoyed with chips or as a condiment.