assuming i have continuous interest rates for example 10% and 3%. Can I simply add them (13%) or subtract them (7%) . or I need to do some kind of transformation. Sorry the question could look naive but I look at the internet without success.

yes

QuoteOriginally posted by: daveangelyesI don't disagree.

You can do it, but it might not give you the answer you want.For example, you invest $1 at 10% per year, continuously compounded, for one year; then at 3% for the next year. Your final wealth will be e^(0.10 + 0.03) = e^0.13 = 1.1388. Your continuously compounded return is 13%, but your simple return is 13.88% and your annualized continuously compounded return is 6.5%.Now change the problem by investing each time for one month. Now your final wealth is e^(0.10/12 + 0.03/12) = e^0.010833 = 1.010892. Your continuously compounded return is 1.0833%, your simple return is 1.0892% and your annualized continuously compounded return is 6.5%.Or, suppose you borrow $1 at 3% continuously compounded per year and invest it at 10% continuously compounded per year; for one year. At the end of the year, your asset is worth 1.1052 and you owe 1.0305. Your profit is 0.0747, or 7.47% simple return, 7.21% continuously compounded return, on $1.I could go on for a long time. There are problems for which addition or subtraction give the correct answer, and problems for which they do not.