Question

1(a). (TRUE or FALSE?) Other things being equal, the less frequently interest is compounded, the more...

1(a). (TRUE or FALSE?) Other things being equal, the less frequently interest is compounded, the more interest the investment will earn.

1(b). (TRUE or FALSE?) The higher the number of periods, the lower the future value.

1(c). (TRUE or FALSE?) Annuities due is the payments are made/received at the beginning of the period.

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Answer #1

1(a) False,

Compound interest is the interest calculated on the initial principal and acculated interest of previous periods. So if the interest is compounded more frequently, the more interest the investment will earn and viceversa.

1(b) True,

Time value of money is a concept says that the value of money will be decreased with the increase of number of periods. So, the higher the number of periods, the lower the future value.

1(C) True,

Annuity due is the payment made at the beginning of each period at same intervals of time.

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