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All else equal, a longer investment horizon results in which of the following? A higher present...

All else equal, a longer investment horizon results in which of the following?

A

higher present values
B

fewer number of periods per year
C

higher future values
D

lower effective annual rates
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Answer #1

The correct answer is Higher future values

Future value is the computation of present vaue on a future date, the future value is higher when the investment horizon is greater because the value gets compounded by interest rate for a higher period of time which results in higher future value.

Higher Investment horizon would have increased number of periods and lower present values while it would have no effect on effective annual rate, Therefore, these options are wrong.

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