I am getting confused how to convert EAR say 2% to continuosly compounded rate.
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when u need to convert EAR to continuous rate
formula is
ln(1+EAR/100)
i.e
ln(1.02)
now in calci it will be
type factor of 2% i.e
1.02 then
ln then
*100
answer=1.98
note: continuous rate is stated rate and will be less than EAR.