An interest rate is 12% APR when measured using semiannual compounding. What is the equivalent rate when measured using continuous compounding? How much will $100 grow to in 3 years if it's invested at 12% APR with semiannual compounding? Is that more, less, or the same as it will grow to over the same period using the continuously compounding equivalent rate?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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An interest rate is 12% APR when measured using semiannual
compounding. What is the equivalent rate when measured using
continuous compounding? How much will $100 grow to in 3 years
if it's invested at 12% APR with semiannual compounding? Is that
more, less, or the same as it will grow to over the same period using
the continuously compounding equivalent rate?
11.33 %; $140.49; same
11.65%; $141.85; same
11.33%; 140.49; less
11.65% ; 141.85; less
11.33%; 140.49; less. You selected th
Transcribed Image Text:An interest rate is 12% APR when measured using semiannual compounding. What is the equivalent rate when measured using continuous compounding? How much will $100 grow to in 3 years if it's invested at 12% APR with semiannual compounding? Is that more, less, or the same as it will grow to over the same period using the continuously compounding equivalent rate? 11.33 %; $140.49; same 11.65%; $141.85; same 11.33%; 140.49; less 11.65% ; 141.85; less 11.33%; 140.49; less. You selected th
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