Ten percent compounded quarterly means 5 percent per compounding period.

Question

Quizplus · Accepted Answer

Ten percent compounded quarterly means that the interest is calculated and added to the account every three months, or four times per year. To find the interest rate for each compounding period, we divide the annual interest rate by the number of compounding periods in a year (4 in this case). Therefore, the interest rate for each quarter is 2.5% (10% / 4). So, the correct statement would be "10 percent compounded quarterly means 2.5 percent per compounding period."

Ten Percent Compounded Quarterly Means 5 Percent Per Compounding Period