An increase in the frequency of compounding will increase the future value of an investment but decrease its present value.

Name: An increase in the frequency of compounding will increase the future value of an investment but decrease its present value.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This is because with more frequent compounding, interest is earned more often and therefore the investment grows faster over time. However, this also means that there is less money available to invest at the beginning, reducing the present value.

An Increase in the Frequency of Compounding Will Increase the Future