27. Select the correct answer from the terms provided to complete the answers th

Question

27. Select the correct answer from the terms provided to complete the answers than questions, therefore some of the items the items will remain unused sentences below. There are more 1. Compounding of interest 2Varying interest rate 3. Equivalence relation 4 Payment period 5. Capital recovery 6.Compounding perlod Interest period 8Number of interest perlods 9 Nominal rate 1 Effective interest rate When no assumed to be compounded over the When the compounding period is given without the interest rate idendtfied as either nominal or eflective, it is assumed to be a (an The m in the efective interest rate equation is always equal to the number of interest is compounded during the period over which the s desired are an factors are involved There possible when of infinty

Explanation / Answer

1. When no compounding period is stated with an interest rate, the interest is assumed to be compounded over the single payment.

2. When the compounding period is given without the interest rate identified as either nominal or effective, it is assumed to be a nominal rate.

3. The time period over which payments or receipts occur is known as the payment period.

4. The m is the effective interest rate equation is always equal to the number of times interest is compounded during the period over which the effective interest rate is desired.

5. There are an infinite number of correct interest rate- time period combinations possible when only varying interest rate factors are involved.

6. Continuous compounding means the compounding the interest approaches the limit of infinity.

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