Continuous vs Discrete Interest Rate

Updated: Jul 28, 2021

Interest rates can be expressed as discrete or continuously compounded.


To convert from Continuous to discrete use the following formula:

Example: The continuously compounded rate is 6% annually. What is the annual discrete rate?



To convert from discrete to continuous use the following formula:

Example: The continuously compounded rate is 6.1837% annually. What is the annual discrete rate?