How to determine how many times you compound in a year for compound interest

The video tutorial explains the concept of compound interest, detailing the formula and its components such as principal, interest rate, and time. It covers various compounding frequencies like yearly, semi-annually, quarterly, monthly, biweekly, weekly, and daily, explaining how each affects the final amount. The tutorial also introduces continuous compounding, explaining how it differs from regular compounding and involves the mathematical constant E, leading to the PERT formula for continuously compounded interest.

What does the variable 'P' represent in the compound interest formula?

• Interest rate

• Initial investment

• Number of years

• Final value

If interest is compounded quarterly, what is the value of N?

• 2

• 4

• 1

• 12

How many times is interest compounded in a year if it is compounded monthly?

• 6

• 12

• 24

• 52

What is the constant used in the formula for continuously compounded interest?

• E

• H

• G

• Pi

Which formula is used for continuously compounded interest?

• A = P * (1 + R/N)^(N*T)

• A = P * (1 + R*T)

• A = P * E^(R*T)

• A = P * (1 + R/N)