What Continuously Compounded Effective Rate of Interest Will Yield the Same

question 2

Multiple Choice

What continuously compounded effective rate of interest will yield the same present value of a future cash flow as an annual rate of interest of 8.25%?

• A) 8.60%
• B) 7.93%
• C) 8.25%
• D) 7.70%

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Definitions:

Compulsion

A repetitive and seemingly purposeful behavior performed in response to an obsession or according to rules that must be rigidly followed.

Ritualized Behaviors

Actions performed in a prescribed manner that are often symbolic and are part of a larger cultural or religious practice.

Disaster

A sudden event, such as an accident or a natural catastrophe, that causes great damage or loss of life.

Obsessive-compulsive Disorder

A mental disorder characterized by unwanted, recurring thoughts and repetitive behaviors that the individual feels compelled to perform.