Certain investments compound interest at different intervals. What effect does the size of the compounding interval have on the yield of the investment?
a. Investments with smaller compounding intervals have a higher yield, because the interest
earned is reinvested more quickly and thus gains compound interest more quickly.
b. Investments with smaller compounding intervals have a lower yield, because the interest
earned is smaller at each interval.
C. The size of the compounding interval does not affect the total yearly interest percentage rate
and only exists for bookkeeping purposes.
d. Investments with smaller compounding intervals have a lower yield, because the bank
charges a small fee every time interest is compounded.