Continuously compounded rate of return: Difference between revisions
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The more frequently a nominal annual rate of interest is compounded within a given time period, the greater the total interest accrued by the end of the period. | The more frequently a nominal annual rate of interest is compounded within a given time period, the greater the total interest accrued by the end of the period. | ||
Continuous compounding takes this process to its theoretical limit by assuming that the nominal annual interest is calculated and compounded continuously at the given continuously compounded % rate. | Continuous compounding takes this process to its theoretical limit by assuming that the nominal annual interest is calculated and compounded continuously at the given continuously compounded % rate. | ||
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* [[Effective annual rate]] | * [[Effective annual rate]] | ||
* [[Nominal annual rate]] | * [[Nominal annual rate]] | ||
Revision as of 06:47, 3 August 2013
The more frequently a nominal annual rate of interest is compounded within a given time period, the greater the total interest accrued by the end of the period.
Continuous compounding takes this process to its theoretical limit by assuming that the nominal annual interest is calculated and compounded continuously at the given continuously compounded % rate.
