Question

You have an APR of 7.5% with continuous compounding. The EAR is _____.

A. 7.5%
B. 7.65%
C. 7.79%
D. 8.25%
E. None of the above

Answer 1

Answer:

c. 7.79%

Explanation:

EAR = e^.075 - 1 = 7.79%

Answer 2

Answer:

C. 7.79%  

Explanation:

EAR = exp(APR) - 1

        = exp(0.075) - 1

        = 0.0779

Therefore, The EAR is 7.79%