What happens to the effective annual rate (EAR) if interest is compounded more frequently?
مؤثر سالانہ شرح (ای اے آر) کا کیا ہوتا ہے اگر سود کو زیادہ کثرت سے ملایا جائے؟
Answer: EAR increases
Explanation
When interest is compounded more frequently, the effective annual rate (EAR) increases.
As the interest earns interest more often, resulting in a higher effective rate of return.
This means the investment grows faster over time.
