Multiple choice

Directions: State whether each of the following statements is True Or False.

The total interest received will be same irrespective of the fact, whether compounding is done yearly or quarterly.

  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Compounding frequency affects the total interest earned. More frequent compounding (e.g., quarterly vs. yearly) results in a higher effective interest rate and thus more total interest.