Discretely Compounded Rate of Return
Premium
A discretely compounded rate of return is simply a compounded rate of return with a discrete compounding frequency such as daily, monthly, quarterly, or semi-annually.
As the frequency of compounding increases, the annual effective yield also increases because the interest or income earned is compounded more frequently.
Example
Suppose an investment grows at an annual rate of 10% compounded quarterly. At the end of one year, the investment will grow to:
Unlock Premium Content
Upgrade your account to access the full article, downloads, and exercises.
You'll get access to:
- Access complete tutorials and examples
- Download source code and resources
- Follow along with practical exercises
- Get in-depth explanations