All else constant, for a given nominal interest rate, a decrease in the number o

Question

All else constant, for a given nominal interest rate, a decrease in the number of compounding periods
per year (for example, from monthly compounding to quarterly) will cause the present value of a
sum of money to be received in the future (e.g., $100 to be received 8 years from today) to
a. increase.
b. decrease.
c. remain the same.
d. either increase or decrease depending on the number of years until the money is to be received.
e. this question cannot be answered without additional information.

Explanation / Answer

a.increase

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