Question

4. If you were lending or investing money, assuming you had the choice, how often would you want to compound the interest? What if you were borrowing money? Briefly explain.

Answer 1

If I'll be lending or investing money, then I would always have wanted a HIGHER rate of compounding and I would have always wanted more of compounding because it would have helped me in order to earn more interest because of me, being an investor or a lender.

When I am borrowing money, then I will have to repay my interest and higher amount of compound interest or higher frequency of compounding interest will be leading to higher amount of interest payment and hence I would always want a LOWER frequency of compounding when I am a borrower.