Question

How does the amount of interest change if the compounding occurs more frequently?

Answer 1

(Nominal and effective interest rates) An interest rate takes two forms:nominal Interest rate and effective interest rate...However, if compounding is more frequent than once per year, then the effective interest rate will be greater than 10% The more often compounding occurs, the higher the effective interest rate.

Answer 2

An interest rate takes two forms: nominal interest rate and effective interest rate. ... However, if compounding is more frequent than once per year, then the effective interest rate will be greater than 10%. The more often compounding occurs, the higher the effective interest rate.

Explanation: