What continuously-compounded rate delivers the same return?
finance
Description
1. You are quoted an interest rate of 1.2% p.a., compounded monthly:
a. What is the equivalent rate, compounded quarterly?
b. What continuously-compounded rate delivers the same return?
2. You are expecting to receive €1,000 in four years’ time: a. What’s the present value of this amount if the discount rate is 1.5% p.a.,
i. Compounded semi-annually?
ii. Compounded continuously?
