 Financial Terms Discrete compounding

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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, . . .

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