If the Number of Compounding Intervals Are Increased Within a Year

question 2

Multiple Choice

If the number of compounding intervals are increased within a year, it will

• A) increase or decrease the effective annual interest rate depending on the coupon rate.
• B) not affect the calculation of the annual interest rate.
• C) decrease the effective annual interest rate of a low coupon bond.
• D) increase the annual effective interest rate.

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Definitions:

Anarchist

An individual who opposes organized government and seeks to promote a society based on voluntary cooperation and free association of individuals and groups.

Fascist

Pertaining to or advocating for a form of far-right, authoritarian ultranationalism characterized by dictatorial power, suppression of opposition, and strong regimentation of society and the economy.

Democracy

A political system characterized by citizen participation in the political process.

Anarchy

A state of society without government or law, where there is no centralized authority, often implying disorder due to the absence of government control.