× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
I
3
p
2
w
2
y
2
J
2
Q
2
r
2
o
2
e
2
j
2
d
2
T
2
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
samualson samualson
wrote...
Posts: 2459
Rep: 13 0
6 years ago
Why does the future value of a given amount increase when interest is compounded nonannually as opposed to annually?
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
Read 59 times
2 Replies

Related Topics

Replies
wrote...
#1
6 years ago
 Because "interest is earned on interest" more frequently as the length of the compounding period declines, there is an inverse relationship between the length of the compounding period and the effective annual interest rate (and future value): The shorter the compounding period is, the higher the effective interest rate will be (and the higher the future value will be). Conversely, the longer the compounding period is, the lower the effective interest rate will be (and the lower the future value will be).
 
samualson Author
wrote...
#2
6 years ago
Thank you for being such a great website leader! Your answer's right.
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1733 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 335
  
 347
  
 375
Your Opinion
Which country would you like to visit for its food?
Votes: 264
Previous poll results: Which of the following is the best resource to supplement your studies: