4 a. Which of the following provides the greatest annual interest and highest fu

Question

4 a.

Which of the following provides the greatest annual interest and highest future value?

15% compounded annually

15% compounded semiannually

15% compounded monthly

15% compounded weekly

V. None of the above

b.

If you have $10,000 to invest today, which of the following will give you highest future value?

I. 10% per year, compounded annually

II. 10% per year, compounded semiannually

III. 10% per year, compounded quarterly

IV. 10% per year, compounded daily    c.

In calculation of time value of money, the frequency of compounding the interest rate has a _________ relationship to the present value and _________ relationship to the future value of an investment.

positive; positive

negative; positive

negative; negative

positive;negative

I.

15% compounded annually

II.

15% compounded semiannually

III.

15% compounded monthly

IV.

15% compounded weekly

V. None of the above

b.

If you have $10,000 to invest today, which of the following will give you highest future value?

I. 10% per year, compounded annually

II. 10% per year, compounded semiannually

III. 10% per year, compounded quarterly

IV. 10% per year, compounded daily    c.

In calculation of time value of money, the frequency of compounding the interest rate has a _________ relationship to the present value and _________ relationship to the future value of an investment.

positive; positive

negative; positive

negative; negative

positive;negative

Explanation / Answer

15% compounded weekly

10% per year, compounded daily- more the frequency period higher the future value

negative; positive

15% compounded weekly

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