What is the term for continuous compounding in finance?

Continuous compounding refers to the process of calculating interest so that it is added to the principal balance an infinite number of times per year. This approach maximizes the amount of interest earned or incurred, as it accounts for the interest on both the original principal and on any interest that has already been added to the account. The formula used for continuous compounding is derived from the exponential function, specifically using Euler's number (e), which leads to the notion of continuous growth.

The term "continuous compound" accurately encapsulates this financial concept, emphasizing the idea that compounding occurs without interruption over time. It is the most precise terminology for describing a scenario where compounding happens continuously rather than at discrete intervals, such as annually, quarterly, or monthly. Other terms do not convey this specific characteristic, making "continuous compound" the most appropriate answer in this context.