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Exercise 2.1 Suppose the 1-year continuously compounded interest rate is 12%. What is the effective annual interest rate? Exercise 2.2 If you deposit $2,500 in

Exercise 2.1 Suppose the 1-year continuously compounded interest rate is 12%. What is the effective annual interest rate?

Exercise 2.2 If you deposit $2,500 in a bank account that earns 8% annually on a continuously compounded basis, what will be the account balance in 7.14 years?

Exercise 2.3 If an investment has a cumulative 63.45% rate of return over 3.78 years, what is the annual continuously compounded rate of return?

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