Calculating Continuously Compounded Rates of Returns
Abdulla Javeri
30 years: Financial markets trader
Continuously compounded rates of return are widely used in financial markets, especially in the world of derivatives. In this video, Abdulla outlines the concept and provides some examples framed as investment returns.
Continuously compounded rates of return are widely used in financial markets, especially in the world of derivatives. In this video, Abdulla outlines the concept and provides some examples framed as investment returns.
Calculating Continuously Compounded Rates of Returns
5 mins 3 secs
Continuously compounded rates of return are widely used in financial markets, especially in the world of derivatives. They are typically useful when dealing with returns on assets whose price cannot fall below zero.
Key learning objectives:
Define continuous compounding
Calculate both the continuously compounded rate of return, and the future value of an investment
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