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( a ) An investor receives $ 1 , 1 0 0 in one year in return for an investment of $ 1 , 0
a An investor receives $ in one year in return for an investment of $ now.
Calculate the percentage return per annum with
i Annual compounding.
ii Semiannual compounding.
iii Monthly compounding.
iv Continuous compounding.
b What rate of interest with continuous compounding is equivalent to per annum
with monthly compounding?
c A deposit account pays per annum with continuous compounding, but interest
is actually paid quarterly. How much interest will be paid each quarter on a $
deposit?
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