Which of the following statements are most likely to be false? The effective annual interest rate will always be greater than the quoted (or annual percentage) interest rate. All else being the same, the present value of a five-year, $10,000 annuity due will be higher than the present value of a five-year, $10,000 ordinary annuity. If you were depositing funds at a bank, and the quoted interest rate was 4% p.a., you would be better off if the bank used semi-annual compounding rather than quarterly compounding. a. I and II only. b. I and III only. c. II and III only. d. I, II and III.
Which of the following statements are most likely to be false? The effective annual interest rate will always be greater than the quoted (or annual percentage) interest rate. All else being the same, the present value of a five-year, $10,000 annuity due will be higher than the present value of a five-year, $10,000 ordinary annuity. If you were depositing funds at a bank, and the quoted interest rate was 4% p.a., you would be better off if the bank used semi-annual compounding rather than quarterly compounding. a. I and II only. b. I and III only. c. II and III only. d. I, II and III.
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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Which of the following statements are most likely to be false?
- The effective annual interest rate will always be greater than the quoted (or annual percentage) interest rate.
- All else being the same, the
present value of a five-year, $10,000annuity due will be higher than the present value of a five-year, $10,000 ordinary annuity. - If you were depositing funds at a bank, and the quoted interest rate was 4% p.a., you would be better off if the bank used semi-annual compounding rather than quarterly compounding.
a. I and II only.
b. I and III only.
c. II and III only.
d. I, II and III.
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