Hi, I remember seeing somewhere that working out the EAY of a continuous compounding security can use the HPY in that it equals: e ^ (-)(1+HPY) However when given say: Continuously Compounding frequency 7.95%, and want to work out the EAY, the formula is: (e ^ 0.0795) -1 Why is this? And is it the case just use the HPR formula when given it?
The first formula is wrong. Just remember the second one.
Thanks, been looking everywhere for the question that I got that formula from but I can’t find it. I’ll just remember the second one anyway thanks.