$10,000 compounded 1 time at 4% per period is different from $10,000 compounded 4 times at 1% per period; the latter results in a higher value.

Name: $10,000 compounded 1 time at 4% per period is different from $10,000 compounded 4 times at 1% per period; the latter results in a higher value.
Brand: Quizplus
Rating: 4.7 (51 reviews)

Question

Quizplus · Accepted Answer

This is true because compounding more frequently (in this case, four times instead of once) results in earning interest on the previously earned interest more frequently, leading to a higher overall return.

$10,000 Compounded 1 Time at 4% Per Period Is Different