All else equal, if you expect to receive a certain amount in the future, say, $500 in ten (10) years, the present value of that future amount will be lowest if the interest earned on such investments is compounded
A)daily
B)weekly
C)monthly
D)quarterly
E)annually

Question

Quizplus · Accepted Answer

The present value is lowest when the interest is compounded most frequently, as this results in the highest effective interest rate. Daily compounding leads to the lowest present value.

All Else Equal, If You Expect to Receive a Certain