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Financial mathematics Experience it live.

From sequences to loans: arithmetic and geometric growth, savings plans, annuities, compounding within the year and perpetuities.

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Compounding Frequency & Effective Rate

Compounding Frequency & Effective Rate

What happens when the bank credits interest several times a year? The balance grows as a staircase of interest pieces, each slightly larger than the last. An interest stack compares m = 1 with m periods and shows the small extra. The second card plots the effective annual rate p_eff = 100(1 + p/(m·100))^m − 100 against m: it rises but levels off at the continuous-compounding limit 100(e^{p/100} − 1). Slide example (€1000, 6 %, 10 years) and Bernoulli's limit e. Refutes "monthly gives 12 times as much" and "p_eff grows without bound".

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