Hacker News new | past | comments | ask | show | jobs | submit login

A common misunderstanding is that if a bunch of investors pool their stocks, they’ll earn more compounding interest on the larger pooled principal than they would individually, or conversely that a stock should not be split or it will earn less interest.

The continuously compounding exponential return formula is P(t) = P0 e^rt

Note that only time enters the argument of the exponent, not the principal. So the returns are invariant to divisions of the principal (ignoring human behavior effects).




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: