Suppose that zero interest rates with continuous compounding are as follows: Maturity( years) Rate (% per annum)

Question:

Suppose that zero interest rates with continuous are as follows:
Maturity( years) Rate (% per annum)
1 ……………………………………. 2.0
2 ……………………………………. 3.0
3 ……………………………………. 3.7
4 ……………………………………. 4.2
5 ……………………………………. 4.5
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...