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Nothing in finance is really continuous though. Most banks will calculate interest daily. On a related note, I recently took the time to learn some financial E
by nly 5y ago
Nothing in finance is really continuous though. Most banks will calculate interest daily.
On a related note, I recently took the time to learn some financial Excel functions to create a Rent vs Buy spreadsheet.
It's worth anyone who ever keeps track of their finances using a spreadsheet to learn the FV function:
https://support.microsoft.com/en-us/office/fv-function-2eef9f44-a084-4c61-bdd8-4fe4bb1b71b3 https://support.microsoft.com/en-us/office/fv-function-2eef9...
And the PMT function, which is useful for mortgage calculations:
https://support.microsoft.com/en-us/office/pmt-function-0214da64-9a63-4996-bc20-214433fa6441 https://support.microsoft.com/en-us/office/pmt-function-0214...
- names_are_hard 5y agoYeah, you're right. I'm just talking about spherical chickens here. In real life, if your bank quotes you an APY they've already annualized it. I just think it's interesting to think about how in a perfect world, the rule is actually really good. Reality is just way less elegant than a classroom, unfortunately. So I should have been clearer that I'm not criticizing the article, just offering another perspective on the how and why the rule is imperfect, which the article acknowledges as well.