Problem 44431. continuous compounding

Created by jean claude

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Last Solution submitted on Nov 24, 2020

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Solution 1378817

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3 Comments

David Verrelli on 13 Dec 2017

Please check this. Am I misreading your problem statement? AFAIK my code here implements the standard formula.

jean claude on 13 Dec 2017

to clarify what you are doing is a yearly compounded interest, what is asked is continuously compounded interest rate!

David Verrelli on 16 Dec 2017

Ah. Thank-you. That was the part I wasn't getting. For the benefit of others: . . . "Continuous compounding is the mathematical limit that compound interest can reach. It is an extreme case of compounding since most interest is compounded on a monthly, quarterly or semiannual basis. Hypothetically, with continuous compounding, interest is calculated and added to the account's balance every infinitesimally small instant. While this is not possible in practice, the concept of continuously compounded interest is important in finance." (investopedia.com) . . . Also there is a nice explanation at moneychimp.com .

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Problem 44431. continuous compounding

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Problem 44431. continuous compounding

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