Question

#42 Which of the following statements is true? a. A continuous compounded rate of return is...

#42 Which of the following statements is true?

a. A continuous compounded rate of return is higher than any discretely compounded rate of return.

b. A continuous compounded rate of return is lower than any discretely compounded rate of return.

c. A continuous compounded rate of return is the same as that of the discretely compounded rate of return.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

ANSWER

CORRECT OPTION WHICH IS TRUE OPTION (a) "A continuous compounded rate of return is higher than any discretely compounded rate of return"

EXPLANATION

  • Discretely Compounding means compounding at some fixed intervals ( be it Annual, Semi annual, Quaterly, Monthly etc). In other words, the Compounding period is defined .
  • Whereas Continuous Compounding means compounding of Interest at lowest intervals as possible.
  • Hence the "Continuous Compounding" generates more Interest as the frequency of compounding is higher in such case. Therefore Rate of Return is higher in this case as compared to Discretely Compounding
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following statements is MOST true? A. The higher the required rate of return...
Which of the following statements is MOST true? A. The higher the required rate of return on future cash flows, the higher the price that someone is willing to pay for those cash flows. B. The formula for present value of an annuity due can only be used when the first cash flow is occurring at time 0. C. The general formula for future value of an ordinary annuity is equal to the general formula for present value of an...
Which of the following statements is true? A.)The rate of fluorescence is higher than that for...
Which of the following statements is true? A.)The rate of fluorescence is higher than that for phosphorescence. B.) In fluorescence, ?S ? 0. C.) In phosphorescence, ?S ? 0. D.) Fluorescence is a forbidden transition.
Which of the following statements about continuous random variables and continuous probability distributions is/are TRUE? I....
Which of the following statements about continuous random variables and continuous probability distributions is/are TRUE? I. The probability that a continuous random variable takes a specific value is 0. II. The probability that a continuous random variable takes a negative value is 0. III. The probability that any uniformly distributed random variable takes a value less than its mean is 0.5. IV. The probability that a normally distributed random variable takes a value less than its mean is 0.5.
Which of the following statements is/are true?   Multiple Choice A. The rate of return required by...
Which of the following statements is/are true?   Multiple Choice A. The rate of return required by the market on a bond that is held until maturity is called the coupon rate. B. A zero coupon bond is one that initially sells at a discount and only makes one payment to bondholders. Both A and B are true. Neither A nor B are true.
Which of the following statements is not true about continuous probability distributions? Select one: a. The...
Which of the following statements is not true about continuous probability distributions? Select one: a. The probability of any event is the area under the density curve over the range of values that make up the event. b. The total area under the density curve must be exactly 1. c. If X is a continuous random variable taking values between 0 and 500, then P(X > 200) = P(X ? 200). d. There are no disjoint events in continuous probability...
Which of the following statements is true about the internal rate of return (IRR)? a.If the...
Which of the following statements is true about the internal rate of return (IRR)? a.If the IRR is less than the required rate of return, the firm is indifferent between accepting or rejecting the investment proposal. b.If the IRR is greater than the required rate, the project is deemed acceptable. c.If the IRR is less than the required rate of return, the project is deemed acceptable. d.If the IRR is greater than the required rate of return, the firm is...
Which of the following statements is true? A. UV light has higher energy than X-Ray radiation....
Which of the following statements is true? A. UV light has higher energy than X-Ray radiation. B. UV light has longer wavelength and higher energy than visible light. C. UV light has higher energy and higher frequency than visible light. D. The higher the frequency of a wave, the lower its energy.
According to the concept of ventricular compliance, which of the following statements are true? a. Increased...
According to the concept of ventricular compliance, which of the following statements are true? a. Increased compliance implies that for the same pressure, volume is smaller. b. Decreased compliance implies that for the same pressure, volume is larger. c Increased compliance implies that if volume is the same, pressure must be higher. d. Increased compliance implies that for the same pressure, volume is larger. e. Decreased compliance implies that if volume is the same, pressure must be lower.
According to the concept of ventricular compliance, which of the following statements are true? A) Decreased...
According to the concept of ventricular compliance, which of the following statements are true? A) Decreased compliance implies that for the same pressure, volume is larger. B) Increased compliance implies that if volume is the same, pressure must be higher. C) Increased compliance implies that for the same pressure, volume is smaller. D) Decreased compliance implies that if volume is the same, pressure must be lower. E) Increased compliance implies that for the same pressure, volume is larger.
(5 marks) Which of the following statements are correct? a. Stock A has an expected return...
Which of the following statements are correct? a. Stock A has an expected return of 10% and a standard deviation of 15%, and stock B has an expected return of 13% and a standard deviation of 14%. No investor would ever buy stock A because it has a lower expected return and a higher risk than stock B. b. A firm is expected to pay a dividend of £3 per share in one year. This dividend is expected to grow...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT