Question: Definition: For a given compounding method with interest rate r the effective rate r e is one that gives the same growth rate over a

Definition: For a given compounding method with interest rate r the effective rate re is one
that gives the same growth rate over a one year period under annual compounding.
Note: Two methods of compounding are equivalent if and only if they have the same effective
rates. That is if they are both equivalent to the same annual compounding rate.
What is the effective rate for compounding continuously at 3%.
Definition: For a given compounding method with interest rate r the

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