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Frequency of compounding

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If, as an investor, you had a choice of daily, monthly, or quarterly compounding, which would you choose? Why?

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Solution Summary

Answers which is best-daily, monthly or quarterly compounding with the help of an illustration.

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As an investor I would choose daily compounding.
To see why this is so assume an investment of $ 1000 for a period of 1 year at the interest rate of 10%

^ denotes power

1) Daily compounding

Principal= $1,000
Interest rate= 10%
Daily interest ...

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