1. (TRUE or FALSE?) Compounding periods can be a year, aquarter, a month, a week,...

1. (TRUE or FALSE?) Compounding periods can be a year, a quarter, a month, a week, or even a day, and the shorter the period, the more frequently interest payments are compounded, and the larger the future value of $1 for a given time period.

2. (TRUE or FALSE?) A dollar today is worth more than a dollar received in the future.

3. (TRUE or FALSE?) Interest earned on interest grows exponentially as the investment period increases.

Expert Solution

Answer 1)

The statement is true the higher the frequency, teh higher will be the value and compounding can done yearly, monthly , weekdly or daily.

True.

Answer 2)

The rule of time value of money is that today Dollar is always higher than the dollar even next day. The value of money decreases with the time because of inflation.

True.

Answer 3)

higher the period, higher the future Value.

True

jeff jeffy answered 2 years ago

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