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An account initially contains an amount A_0. After 1 year, simple interest at rate r per year, is applied to the account, resulting in amount
An account initially contains an amount A_0. After 1 year, simple interest at rate r per year, is applied to the account, resulting in amount A_1 = A_0 middot (1 + r) What is the effective annual rate of return r_A? r_A = Your answer should be a function of r alone. Type r as r. An account initially contains an amount B_0. After 2 years, simple interest at rate r per year, is applied to the account, resulting in amount What is the effective annual rate of return r_B? r_B = Your answer should be a function of r alone. Type r as r. Taylor expansion of the function r_B(r) gives r_B(r) = r - r^2/2 + O(r^3)
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