The effective rate of interest decreases as the compounding frequency increases.

Name: The effective rate of interest decreases as the compounding frequency increases.
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The effective rate of interest increases as the compounding frequency increases. This is because the interest earned is added to the initial principal, resulting in a higher amount for future interest calculations. As a result, the total interest earned is higher, leading to a higher effective rate of interest.

The Effective Rate of Interest Decreases as the Compounding Frequency