CFA L1 Quants doubt

Given a €1,000,000 investment for four years with a stated annual rate of 3% compounded continuously, the difference in its interest earnings compared with the same investment compounded daily is closest to:

  1. €1.
  2. €6.
  3. €455.

I have a doubt as to why we are inputting 1,000,000 as PV and not PMT? Since we are making an investment shouldnt it be inputted as PMT in the calculator

PMT is used for annuity calculations (regular series of payments). This is a single deposit made now which matures in 4 years.

Standard Breddie advice: Read your calculator manual, do the examples. :+1:

1 Like