Other things being equal,the more frequent the compounding period,the:
A) higher the annual percentage rate.
B) lower the annual percentage rate.
C) higher the effective annual interest rate.
D) lower the effective annual interest rate.

Question

Quizplus · Accepted Answer

The effective annual interest rate (EAR) takes into account the effects of compounding, so the more frequent the compounding period, the higher the EAR will be. This is because more frequent compounding allows for more interest to be earned on the interest already accumulated, resulting in a higher yield overall. The annual percentage rate (APR) may or may not change with more frequent compounding, depending on the loan or investment product.

Other Things Being Equal,the More Frequent the Compounding Period,the