An Initial Investment of $1000 Grows at an Annual Interest

question 112

Multiple Choice

An initial investment of $1000 grows at an annual interest rate of 7% compounded continuously. How long will it take to double the investment?

• A)10.29 years
• B)9.29 years
• C)9.90 years
• D)10.90 years
• E)1 year

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Definitions:

Semiannually

Semiannually implies an occurrence or calculation that happens twice a year, often used in the context of interest payments or reporting periods.

Annually

Occurring once every year or relating to a period of one year.

Current Yield

Yearly returns in the form of interest or dividends as a ratio of the security's present price.

Coupon

A coupon is the interest payment made to bondholders, usually on an annual or semi-annual basis.