Question

if an investment has a cumulative 63.45% rate of return over 3.78 years, what is the annual continuously compounded rate of return?

Answer 1

The annual continuously compounded rate of return is 51.07%.

Step-by-step explanation:

The annual continuously compounded rate of return can be found using the formula:

R = ln(1 + Rc),

where R is the continuously compounded rate of return and Rc is the cumulative rate of return.

In this case, the cumulative rate of return is 63.45%, or 0.6345.

Therefore, the annual continuously compounded rate of return is:

R = ln(1 + 0.6345) = 0.5107, or 51.07%.