Which of the following statements is correct? A. a. Except in situations where compounding occurs annually, the periodic interest rate exceeds the nominal interest rate. B. b. The effective annual rate always exceeds the nominal rate, no matter how few or many compounding periods occur each year. C. c. If compounding occurs more frequently than once a year, and if payments are made at times other than at the end of compounding periods, it is impossible to determine present or future values, even with a financial calculator. The reason is that under these conditions, the basic assumptions of discounted cash flow analysis are not met. D. d. Assume that compounding occurs quarterly, that the nominal interest rate is 8 percent, and that you need to find the present value of $ 1,000 due 6 months from today. You could get the correct answer by discounting the $ 1,000 at 2 percent for 2 periods. E. e. Statements a, b, c, and d are all false.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Which of the following statements is correct? A. a. Except in situations where compounding occurs annually, the periodic interest rate ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
What does it mean to have a shortage of goods?
Answers (1)
Kelly Fisher invested a total of $20,000 in two municipal bonds that have yields of 7% and 10% interest per year, respectively.
Answers (1)
Canyon Tours showed the following components of working capital last year: Beginning of Year End of Year Accounts receivable "$ 25,200" $ 23,600 Inventory 12,600 13,700 Accounts payable 15,100 17,700 a.
Answers (1)
Shown below are selected data from the financial statements of Noble Computers. (Dollar amounts are in millions, except for the per share data.
Answers (1)
A certificate of deposit allows deposits and withdrawals at any time without a financial penalty.
Answers (1)
New Questions in Business
Determine the cost of merchandise sold for the transaction on September 25 using the perpetual inventory system and the FIFO method.
Answers (1)
Venus Robotics can produce 23,000 robots a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000.
Answers (1)
The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering liquidation: Cash $ 100,000 Liabilities $ 40,000 Noncash assets 210,000 Keaton, Capital 90,000 Lewis, Capital 60,000 Meador, Capital 120,000 Total $
Answers (1)
In the context of management functions, which of the following is true of planning? a) It involves hiring and leading workers. b) It is the last function of management. c) It is one of the best ways to improve performance.
Answers (1)
The market equilibrium A. occurs only when consumer surplus exceeds producer surplus. B. minimizes the profit of the market because it guarantees that all mutually beneficial transactions will happen. C.
Answers (1)