Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Define compounding
Expert Solution
Step 1
A compounding is the interest charged on interest. When any investment is made for certain years, the value of these investment are calculated at every compounding periods.
Step 2
The compounding is basically considered the time value of money. The present value and the future value of the investment can be calculated using the compounding effects.
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