Question

Which type of compounding frequency will give you the highest compound interest?

Answer 1

Step-by-step explanation:

The higher the frequency of compounding, the higher is the maturity value of an investment. If one uses the nominal rate of 8% in the above formula, the maturity value of Rs 1 lakh invested in a five-year FD, compounded quarterly, works out to be Rs 1,46,933. But this is not the amount you will receive.