More frequent compounding results in ____ future values and ____ present values than less frequent compounding at the same nominal interest rate.
A)higher, higher
B)lower, higher
C)higher, lower
D)lower, lower

Question

Quizplus · Accepted Answer

More frequent compounding increases the future value because interest is being added to the principal more often, allowing interest to be earned on interest more frequently. However, it results in lower present values because a given future amount discounts to a smaller present value when interest is compounded more frequently at the same nominal rate.

More Frequent Compounding Results in ____ Future Values and ____

More Frequent Compounding Results in Future Values and