Sibling’s explanation is a great starting point! If you understand annual, weekly, and daily compounding, continuous compounding is the limit of what happens when the time you compound over becomes ever shorter. It’s not obvious without calculus, but it’s a well-defined function.
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Sibling’s explanation is a great starting point! If you understand annual, weekly, and daily compounding, continuous compounding is the limit of what happens when the time you compound over becomes ever shorter. It’s not obvious without calculus, but it’s a well-defined function.