Question

"Compounding frequency" refers to
A) What type of interest your account earns
B) How often your interest is calculated and added back into your account
C) What interest rate you can expect from your account
D) How easily you can add money into your account

Answer 1

option b is the answer

Answer 2

Answer:

The correct answer is option B) How often your interest is calculated and added back to your account.

Frequency means the number of times an event occur. Here frequency means number of periods in a year.

So, compounding frequency simply means how many times or the number of periods, the interest is compounded in an year.

Compounding can be annual or monthly or even bi - monthly, quarterly, etc.