Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 89

Sheila Norton has deposited $100 with ING Bank for one year. Let us calculate the account balance at the end of the year for various compounding frequencies. We will assume that the quoted rate in all cases is 10% per annum.

The answers are depicted in Table 2.2. As can be seen, by the time we reach daily compounding, we have almost reached the limiting value.

TABLE 2.2

Compounding at Various Frequencies
Compounding Interval	Terminal Balance
Annual	110.0000
Semi-annual	110.2500
Quarterly	110.3813
Monthly	110.4713
Daily	110.5156
Continuously	110.5171