Continuously Compounded Zero-Coupon Bond Price

Under continuous compounding, discount by $e^{-rT}$.

Here $r=0.05$ and $T=2$.

1. 1. Discount the face value

   $P=100e^{-rT}=100e^{-0.05\times 2}$.

   $$P=100e^{-0.1}$$

2. 2. Evaluate

   Numerically, $P\approx 90.4837$.

Answer: 100e^-0.1