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

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Mathematics

22 June, 06:09

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

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Sidney Hickman · Answer 1

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.

Enrique Middleton · Answer 2

(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.