SOS財務工程複利問題

Question

An interest rate is quoted as 5% per annum with semiannual compounding.What is the equivalent rate with (a)annual compounding.(b)monthly compounding.and(c)continuous compounding.

Answer 1

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a) annual compounding

EAR = (1 + 0.05)^1 -1 = 5%

b) monthly compounding

EAR = (1 + 0.05/12)^12 -1 = 5.1162%

c) continuous compounding

EAR = e^0.05 -1 = 5.1271%

Answer 2

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