Answer: 9.42%.

The effective annual rate with continuous compounding = eʳ − 1 = e⁰.⁰⁹ − 1 = 0.09417, or 9.42%. **Explanation:** When interest is compounded continuously, the formula for the effective annual rate (EAR) is: EAR = eʳ - 1 Where: - e is the mathematical constant approximately equal to 2.71828 - r is the stated annual interest rate (9% = 0.09) Plugging in the values: EAR = e⁰.⁰⁹ - 1 EAR = 1.094174 - 1 EAR = 0.094174 or 9.4174% Rounded to two decimal places, this is 9.42%. **Why other options are incorrect:** - **Option B (9.67%):** This would be the EAR for a higher rate or different compounding frequency. - **Option C (9.20%):** This is lower than the stated rate, which cannot be correct for continuous compounding since continuous compounding always yields a higher effective rate than the stated rate.

Author: LeetQuiz Editorial Team