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Continuous compounding |
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Continuous compoundingThe process of accumulating the time value of money forward in time on a continuous, or instantaneous, basis. Interest is earned constantly, and at each instant, the interest that accrues immediately begins earning interest on itself.Continuous compounding Similar MatchesCompounding periodCompounding periodThe length of the time period that elapses before interest compounds (a quarter in the case of quarterly compounding). Discrete compoundingDiscrete compoundingCompounding the time value of money for separate time intervals. CompoundingCompoundingThe process of accumulating the time value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period. Compounding frequencyCompounding frequencyThe number of compounding periods in a year. For example, quarterly compounding has a compounding frequency of 4. |
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