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    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 Preview

    Let us first calculate the Effective Interest rate (EIR) of money market account which pays 2.4% per year compounded ...

    Solution Summary

    Response provides the steps to compute the value of compounded continuously