ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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n = 1
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n = 2
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n = 12
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n = 4
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Detailed explanation-1: -If the interest is compounded semi-annually, n is 2. If the interest is compounded quarterly, n is 4. If the interest is compounded monthly, n is 12. This is used for interest which is compounded continuously.
Detailed explanation-2: -When interest is compounded semiannually, it means that the compounding period is six months. Therefore, if you have a five-year loan that compounds interest semiannually, the total interest up to that period is added to the principal nine times.
Detailed explanation-3: -Semiannual is simply a word that denotes an occurrence twice a year. For example, a company could have company parties semiannually, a couple could celebrate their marriage semiannually, a family could go on vacation semiannually. Anything that happens twice a year happens semiannually.