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Math Help - Compounding Continuously

  1. #1
    Junior Member
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    Feb 2009
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    Compounding Continuously

    What annual rate compounded continuously is equivalent to a nominal rate of 6% compounded semiannually?

    This is what I tried doing:

    e^{r}-1=e^{0.06}-1

    But i'm guessing that since it's semiannually 0.06 should be divided by 2?

    Let me know if i'm on the right track

    Thanks!
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  2. #2
    Junior Member
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    Jun 2009
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    Earning a nominal 6% compounded semi-ann gives you  1.03^2 at the end of a year, for each dollar invested at the beginning of such year.

    So you want to solve for r, where

     e^r \ =\ 1.03^2

    Hope that helped a li'l bit, li'l cookie.
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  3. #3
    Junior Member
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    Yes it did, thanks hun
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