3.5 Continuous Compounding(Page 51) In the limit as we compound more and more frequently we obtain continuously compounded interest rates R lmm→ A(1+-) Ae $100 grows to $100eR/when invested at a continuously compounded rate R for time T' $100 received at time t discounts to $100e-R7 at time zero when the continuously compounded discount rate is r Options, Futures, and Other Derivatives, 4th edition@ 2000 by John C. Hull Tang Yincai, C 2003, Shanghai Normal University3.5 Options, Futures, and Other Derivatives, 4th edition © 2000 by John C. Hull Tang Yincai, © 2003, Shanghai Normal University Continuous Compounding(Page 51) • In the limit as we compound more and more frequently we obtain continuously compounded interest rates • $100 grows to $100eRT when invested at a continuously compounded rate R for time T • $100 received at time T discounts to $100e-RT at time zero when the continuously compounded discount rate is R mn Rn m Ae m R lim → A(1+ ) =