Nominal Rate Compounded Continuously. Enter c c or continuous for m. 6 annually is credited as 6 12 0 5 every month.
Continuous compounding is when the frequency of compounding m is increased up to infinity. If this instantaneous return is. The effective interest rate is calculated as if compounded annually half yearly monthly or daily.
A nominal interest rate of 6 compounded monthly is equivalent to an effective interest rate of 6 17.
Effective annual rate i. On the other side the stated or nominal rate is less than the effective interest rate. Continuous compounding is the mathematical limit that compound interest can reach if it s calculated and reinvested into an account s balance over a theoretically infinite number of periods. Let p t be the price of a security at time t including any cash dividends or interest and let p t 1 be its price at t 1.
