 Financial Terms Discrete compounding

# Definition of Discrete compounding ## Discrete compounding

compounding the time value of money for discrete time intervals.

## Discrete Compounding

The process of adding interest to a principal plus interest amount
and calculating the resulting compound amount at specific
intervals, such as monthly or annually

# Related Terms:

## Compounding

The process of accumulating the time value of money forward in time. For example, interest
earned in one period earns additional interest during each subsequent time period.

## compounding

When an asset generates earnings that are then reinvested and generate their own earnings.

## Compounding frequency

The number of compounding periods in a year. For example, quarterly
compounding has a compounding frequency of 4.

## Compounding period

The length of the time period (for example, a quarter in the case of quarterly
compounding) that elapses before interest compounds.

## compounding period

the time between each interest computation

## Continuous compounding

The process of accumulating the time value of money forward in time on a
continuous, or instantaneous, basis. Interest is earned continuously, and at each instant, the interest that
accrues immediately begins earning interest on itself. ## Continuous Compounding

The process of continuously adding interest to a principal plus
interest amount and calculating the resulting compound amount

## discrete loss

a reduction in units that occurs at a specific
point in a production process

## Discrete order picking

A picking method requiring the sequential completion of
each order before one begins picking the next order.

## Discrete random variable

A random variable that can take only a certain specified set of discrete possible
values - for example, the positive integers 1, 2, 3, . . .