What is the effective interest rate of 4 compounded monthly
If you held an account in those days, every year your balance would increase by a factor of (1 + r/4)4. Today it's possible to compound interest monthly, daily, Because the standard way to express interest rates is with the annual interest rate which produces the same yield for a one year period. 18% compounded monthly has an effective annual yield of (1 + 1. 1 o o. Continuous Compound Interest: Continuous compounding means compound every instant, consider investment of 1$ for 1 year at 100% interest rate.