Principal and Interest Compounding at Various Intervals Example (Quarterly compounding) Quarterly compounding at an interest rate of r per year means that an interest rate of r/4 is applied every quarter.Hence,money left in the bank for 1 quarter will grow by a factor of 1+(r/4)during that quarter.If the money is left in for another quarter,then that new amount will grow by another factor of 1+(r/4). What is the account value after 1 year? (+)>1+5 r>0. Right or not,why? ●What is the meaning? Xi CHEN (chenxi01090bfsu.edu.cn) Investment Science 9/174Principal and Interest Compounding at Various Intervals Example (Quarterly compounding) Quarterly compounding at an interest rate of r per year means that an interest rate of r/4 is applied every quarter. Hence, money left in the bank for 1 quarter will grow by a factor of 1 + (r/4) during that quarter. If the money is left in for another quarter, then that new amount will grow by another factor of 1 + (r/4). What is the account value after 1 year?  1 + r 4 4 > 1 + r, ∀r > 0. Right or not, why? What is the meaning? Xi CHEN (chenxi0109@bfsu.edu.cn) Investment Science 9 / 174