Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Basic Question 7 of 10
Compounding continuously results in ______ quoted rate.
B. a higher
C. the same
A. a lower
B. a higher
C. the same
User Contributed Comments 4
| User | Comment |
|---|---|
| ibrahim18 | why? |
| mtsimone | CCng results in a higher Rf rate, so discounting a future value will result in a lower PV. A Rf of 4.5% continuously compounded = 4.603%. Discounting $100 for a year at 4.5% = $95.7, but at 4.603% = $95.57. |
| mtsimone | You use CCng when you have a yield, e.g., you own a dividend paying index with 2000 equities. The dividends are coming almost daily, so you want to CC the stated rate. If it's a single equity that pays a dividend during a time period, then use a compounded stated rate. |
| Patdotcom | But it is asking for quoted rate not for PV, isnt it? Shouldnt it be higher? |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
describe the carry forward model without underlying cashflows and with underlying cashflows;
CFA® 2025 Level II Curriculum, Volume 5, Module 31.