An increase in the frequency of compounding will increase the future value of an investment if all other factors are held constant.

Question

Quizplus · Accepted Answer

This is because compounding allows for the reinvestment of interest, resulting in a higher overall return. Increasing the frequency of compounding means that interest is being added more frequently, which compounds over time and leads to a higher future value.

An Increase in the Frequency of Compounding Will Increase the Future