Compounded continuously
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1. A bank pays 2.5% per year on its savings account, while a money market account pays 2.4% per year compounded continuously. The bank's rate is:
a. Lower than the money market rate.
b. Equivalent to the money market rate.
c. Higher than the money market rate, but by less than 0.10%.
d. Greater than the money market rate by more than 0.10%.
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Solution Summary
Response provides the steps to compute the value of compounded continuously
Solution Preview
Let us first calculate the Effective Interest rate (EIR) of money market account which pays 2.4% per year compounded ...
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