If Bank A pays interest on a monthly basis and Bank B pays the same interest on a quarterly basis, then investing $1,000 in Bank B will lead to a higher future value than investing the same amount in Bank A.

Question

Quizplus · Accepted Answer

Monthly compounding results in more frequent interest calculations, leading to a higher future value compared to quarterly compounding, assuming the same interest rate.

If Bank a Pays Interest on a Monthly Basis and Bank