Assume a stated rate of interest of 8 percent.Which form of compounding will produce the highest effective rate of interest?

Question

Quizplus · Accepted Answer

Continuous compounding involves compounding interest an infinite number of times per year, resulting in the highest effective rate of interest. Therefore, the highest effective rate of interest will be produced by continuous compounding, in this case.

Assume a Stated Rate of Interest of 8 Percent