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The Greater the Number of Compounding Periods Within a Year

question 52

True/False

The greater the number of compounding periods within a year, then (1) the greater the future value of a lump sum investment at Time 0 and (2) the smaller the present value of a given lump sum to be received at some future date.


Definitions:

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal amount twice per year, increasing the total amount of interest earned over time.

End-Of-Month Loan Payments

Payments that are made at the end of each month towards the repayment of a loan.

Retirement Account

A financial account designed specifically for savings, investment, and accumulation of money for retirement.

Initial Deposit

The first sum of money placed into an account to open it or start an investment.

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