Question

3. A dollar received today has the same economic value as a dollar received tomorrow.    True          False

4. Market interest rate reflects both earning and purchasing power of the money in the market.     True          False

5. The practice of charging an interest rate to an initial sum of money and to any previously accumulated interest that has not been withdrawn from the initial sum is   ……………

1. compound interest                 b) simple interest             c) deflation             d) nominal interest

6. An initial amount of money in transactions involving debt or investments is called ………….

1. actual dollars          b) earning power         c) principal         d) purchasing power

7. Simple interest is the most commonly used method of calculating interest in the business world.             True               False

8. Effective interest is equal to APR.        True             False

Answer 1