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Differential Equations in Finance
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What is the differential equation that describes the growth of a continuously compounded investment?
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A
$$\frac{dy}{dt} = ry$$
💡 Explanation:
The differential equation that describes the growth of a continuously compounded investment is $$\frac{dy}{dt} = ry$$, where $y$ is the amount of the investment, $r$ is the annual interest rate, and $t$ is the time in years.