continuous compounding

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Continuous compounding

The 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

Describing interest that accumulates on a constant basis. That is, if a loan has continuous compounding interest, the interest accumulates all the time, which means that the interest added to the loan balance also begins earning interest on itself. In the short and medium term, this has almost the same yield as daily compounding interest but over the long term, the continuous compounding interest can earn much more. Albert Einstein was once reported as saying that there is no more powerful force in the universe than continuous compounding interest. See also: Compounding.

continuous compounding

Compounding of interest using the shortest possible interval of time. Although continuous compounding sounds impressive, in practice it results in virtually the same effective yield as daily compounding.
References in periodicals archive ?
To cope with the continuously compounded aging problem in China, the Chinese Government included the cause of aging in China's Twelfth Five Year Plan (2011-2015) in 2011, and accelerated the introduction of policies to support the aged care industry from 2012 on, explicitly encouraged and guided private capital into the aged care industry as well as continued to lower barriers to foreign investment, etc.
It should therefore be verified at any point in time, whatever returns are annually or continuously compounded.
D] are continuously compounded returns (see: Taggart, 1991, and Arzac and Glosten, 2005).
Let y(t, n), without the symbol for infinity, denote continuously compounded yields.
In discussing the yield curve, continuously compounded yields will be used.
Formally, the continuously compounded yield is the limit of [y.
PVC slugs, continuously compounded on the kneader, are hot-cut into chips that are directly conveyed to the first nip of the calender for development into credit card stock, swimming pool liners, and packaging.
The continuously compounded rate of return, [Alpha], on the assets will satisfy [e.
It usually is measured as the standard deviation of expected continuously compounded rates of return on the stock.

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