Which of the following statements is most true?
A)There is a relationship between the future value of investment and the effect of compounding frequency.At low interest rates,increases in compounding frequency will decrease the future value.
B)There is a relationship between the future value of investment and the effect of compounding frequency.At high interest rates,increases in compounding frequency will decrease the future value.
C)Regardless of the value of the interest rate,increasing the compounding frequency will decrease the future value.
D)Regardless of the value of the interest rate,increasing the compounding frequency will increase the future value.

Question

Quizplus · Accepted Answer

Increasing the compounding frequency will increase the future value of an investment regardless of the interest rate. This is because compound interest is calculated on the principal and any previously earned interest, so the more frequently interest is compounded, the more interest is earned and added to the principal, leading to a higher future value.

Which of the Following Statements Is Most True