Use the Formula A $$A = P \left( 1 + \frac { r } { n } \right) ^ { n t } \text { or } A = P e ^ { r t } \text { to solve. }$$

question 98

Multiple Choice

Use the formula A $$A = P \left( 1 + \frac { r } { n } \right) ^ { n t } \text { or } A = P e ^ { r t } \text { to solve. }$$
-Suppose that you have $3000 to invest. Which investment yields the greater return over 7 years: 5.4% compounded monthly or 5.5% compounded quarterly?

• A) Both investment plans yield the same return.
• B) $3000 invested at 5.5% compounded quarterly over 7 years yields the greater return.
• C) $3000 invested at 5.4% compounded monthly over 7 years yields the greater return.

---

Definitions:

At the Money

A term used in options trading to describe a situation where the market price of the underlying asset is equal to the strike price of the option.

Conversion Value

The value of a convertible security if it were converted into a different security, typically shares of the issuing company's stock.

Convertible Bond

A bond that allows the holder to exchange it for a specific number of the issuer's stock shares at chosen times throughout its duration, typically at the holder's option.

Common Stock

A type of equity security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits.