A university student is investing $100 in a deposit and can choose the compounding period that applies. To maximise the effective interest rate, she will choose___________ compounding.
A) quarterly
B) monthly
C) six- monthly
D) daily

Question

Quizplus · Accepted Answer

Daily compounding will result in the highest effective interest rate because interest is calculated and added to the principal more frequently, leading to more interest being earned on interest.

A University Student Is Investing $100 in a Deposit and Can