34. Suppose that you have an investment that earns 10% in the first year, 20% in the second year, and 30% in the third year.
What rate of interest, compounded annually, would yield the same return after three years? (The answer here is related to the geometric mean discussed in Chapters 14 and 19, but you do not need to use that to solve the problem.)
What rate of interest, compounded continuously, would yield the same return after three years? (Thanks for the idea to Yi Cheng, Indiana University South Bend.)