The effective rate that is equivalent to a nominal rate of 8% compounded continuously is :
(Given that $e^{0.08}=1.0833$)
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 8.33%
The effective rate interest is,
$r_{eff}=e^r-1$
$r$ → Nominal rate
$⇒r_{eff}=e^{0.08}-1$
$≃0.0833$
$≃8.33\%$