True or False and explain answer

As the number of compounding periods increases, the difference between the nominal and effective rates will also increase.

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27 May 2023

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Related questions

Which of following statement is false?

When comparing investment it is best not to rely solely on quoted rates.

Compounding typically leads to differences between quoted and effective rates.

The APR on la loan with monthly payments is less than the annual interest you actually pay.

The Apr is the interest rate per period multiplied by the number of periods per year.

With monthly compounding, the APR will be larger than the effective annual rate.

blushkangaroo765

The number of compounding periods can greatly affect the amount of interest (as a percent or in real value) paid when considering loans. The compounding frequency can also affect investments through which we earn interest. How is this? Also, how do we adjust the TVM formula to account for compounding periods?

What factors determine the amount of interest earned on a fixed principal?

Choose the correct answer below.

A. The principal or present value.

B. The interest rate and the number of compounding periods.

C. The effective rate.

D. The number of years.