What is compounding? Question 21 options: The process of calculating the present value from the future value. Earning interest on interest The difference between present value and future value Earning interest over one period
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What is compounding?
Question 21 options:
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The process of calculating the present value from the future value. |
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Earning interest on interest |
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The difference between present value and future value |
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Earning interest over one period |
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- What effect do interest rates have on the calculation of future and present value? How does the length of time affect future and present value? How do these two factors correlate?Which of these will increase the present value of an amount to be received sometime in the future? Group of answer choices Increase in the discount rate. Increase in the time until the amount is received. Decrease in the interest rate Decrease in the future valueHow would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)
- What is expectations theory of the term structure of interest rates? Group of answer choices a. Long term interest is equal to average short-term interest rates. b. Average rates is the term of structure of interest rates. c. Short-term interest is equal to long-term interest rates. d. Long term interest is the sum of all short-term interest rates.What is future value interest factor for an annuity?Find the interest rate implied by the following combinations of present and future values. present values $330, Years 10, future value 591, interest rate? present values $148, Years 3, future value 192, interest rate? present values $230, Years 6, future value 230, interest rate?
- How is discounting used in the context of present values and future values? O To reduce a present amount to its future value O To increase a present amount to its füture value O To increase a future amount to its present value O To reduce a future amount to its present valueCompounding Interest If, as an investor, you had a choice of daily, monthly, or quarterly compounding, which would you choose? Why?Explain the difference between future value and present value. Why is future value a good thing to calculate? Explain the difference between simple interest and compound interest ( minimal 1 paragraph - maximum 2 paragraphs )
- Present value isa. the value now of a future amount.b. the amount that must be invested now to produce a known future value.c. always smaller than the future value.d. all of these.Increasing the number of periods will increase all of the following except: Select one: A. The present value of an annuity B. The present value of $1 C. The future value of $1 D. The future value of an annuityWhich of the following changes would increase the present value of a future payment? (check all that apply) Decrease in the number of years until the future payment is received Increase in the interest rate Increase in the amount of the payment Decrease in the interest rate Increase in the number of years until the future payment is received
