Find the effective rate of return equivalent to declared rate of 12% compounded continuously.

[Use $(1.06)^2=1.1236, (1.03)^4=1.1255$ and $(1.01)^2= 1.1268, e^{0.12}= 1.1275$]

12.75%

The correct answer is option (4) : 12.75%

Given r = 12% p.a

$i=\frac{12}{100}=0.12$

When compounded continuously, then effective rate (per rupee) = $e^i -1$

$= e^{-0.12}-1$

$=1.1275-1$

$= 0.1275$

Hence, effective rate $= 0.1275×100$%

$= 12.75$%