alleryStart learning →If a compounding period is not specifically stated, it is always assumed to be:
AMonthly
BWeekly
CDaily
DAnnual
Answer & Solution
Correct answer: D. Annual
1. Unstated conventions matter in finance problems.
2. Interest rates may compound over different periods.
3. It is always assumed, if not specifically stated, that the compounding period is annual.
4. That is, it is based on years.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 7 'Time Value of Money I: Single Payment Value'_
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