Introduction to Financial Markets (405) — CBSE Class 10 board question

Conversion period refers to the time interval between two successive conversions of interest. When interest is compounded, it is calculated and added to the principal after each conversion period. For example, if interest is compounded quarterly, the conversion period is 3 months. The shorter the conversion period, the more frequently interest is compounded.

Source: Chapter 1, Interest

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• The examiner expects you to define conversion period clearly and give an example (e.g., quarterly, half-yearly, monthly).
• Key terms to use: "time interval," "successive conversions," and "compounding."
• At 2 marks, one clear definition + one example is sufficient — no need to elaborate further.