Assuming that nothing else changes, which one of the following is a correct statement concerning the...
Assuming that nothing else changes, which one of the following is a correct statement concerning the relationship between the variables in present value and future value?
a) The present value is inversely related to the interest rate.
b) The interest rate is inversely related to the future value.
c) The period of time is directly related to the interest rate.
d) The present value is inversely related to the future value.
e) The future value is inversely related to the period of time.
Which of the following will result in the least amount of increases on the interest of interest you can earn?
a) Compounding change from annually to monthly.
b) Compounding change from monthly to weekly.
c) Compounding change from annually to daily.
d) Compounding change from weekly to daily.
Homework Answers
The correct relationship is:
a) The present value is inversely related to the interest rate.
HIgher the interest rate, lower will be the present value and vice versa
All other statements are false
Future value is directly related to interest rate, present value and time period
Which of the following will result in the least amount of increases on the interest of interest you can earn?
The answer is
b) Compounding change from monthly to weekly.
Periods have increased 4 fold
while it is 12 in a), 365 in c) and 7 in d
hence, b is the answer
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