As the number of compounding periods increases,the ________ increases.
A)quoted
B)annual percentage yield
C)effective annual rate
D)both B and C

Question

Quizplus · Accepted Answer

Both the annual percentage yield (APY) and the effective annual rate (EAR) increase as the number of compounding periods increases. APY is the annual rate of return adjusted for compounding, while EAR takes into account the effect of compounding on the overall return. As compounding becomes more frequent, both APY and EAR will increase. Therefore, the correct answer is D, which includes both options.

As the Number of Compounding Periods Increases,the ________ Increases