How to deal with interest rate?

CFA Level II Derivatives
#1

if in the exam we are provided something like annualized interest rate is 5% for a 60 day spot rate,

do we assume it is effective annual rate by doing (1+5%)^(60/365), or treat it like 1+5%*60/360, or assume continuous compounding like e^(log(1.05)*60/365)?

thank you in advance

#2

If it’s continuous, they’ll tell you.

If it’s nominal, they’ll tell you (but they may tell you indirectly; e.g., you’re expected to know that LIBOR is nominal).

If they don’t tell you, it’s effective.

#3

thank you!

#4

You’re welcome.