单选题 As the number of compounding periods increases, what is the effect on the EAR?

A. EAR does not increase.
B. EAR increases at a decreasing rate.
C. EAR increases at a constant rate.

【正确答案】 B

【答案解析】There is an upper limit to the EAR as the frequency of compounding increases. In the limit, with continuous compounding the EAR = e^APR-1. Hence, the EAR increases at a decreasing rate.