Question: Explain in words why 5% per year compounded continuously yields more interest than 5% per year compounded monthly.If an investment earns 5% compounded continuously, it
Explain in words why 5% per year compounded continuously yields more interest than 5% per year compounded monthly.If an investment earns 5% compounded continuously, it is ---Select--- as if interest is being added every moment being added at the end of each month . Thus, the interest for one month will have been calculated on ---Select--- a fixed a growing amount, rather than on ---Select--- a growing (larger) the original fixed (smaller) amount used for interest compounded monthly.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
