Relative to the effective annual rate, the continuously compounded stated annual
rate is:
a) lower
b) higher
c) same
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Ans Lower
it is has been misprinted in the Qbank
why lower?? could you please explain?
It would be lower because
Continuosly compounding is also a SAR as it only states that per anum compunded continuously.
And we know that SAR is always lower than EAR.
I hope this helps you!