Find the Nominal Interest Rate That, When Compounded Continuously, Yields

question 173

Multiple Choice

Find the nominal interest rate that, when compounded continuously, yields an effective interest rate of 20% / year.

• A) 18.232%
• B) 19.089%
• C) 18.237%
• D) 18.654%

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Definitions:

Demand and Supply

Economic model that determines the price of a good in a market, based on the desire and availability of the good.

Law of Demand

The Law of Demand states that, all else being equal, as the price of a good increases, the demand for that good decreases, and conversely, as the price decreases, demand for the good increases.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity, usually intended to protect consumers from excessive costs.

Economic Effects

The consequences of a particular policy or economic event on the welfare of the economy.