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

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asked Nov 27, 2021 4.7k views

2 Answers

Erik Kubica · Answer 1 · 2021-11-28T13:15:07+0000

(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.

Andersvold · Answer 2 · 2021-12-02T16:02:26+0000

Answer:

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:

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

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