You Deposit $2000 in an Account

question 110

Multiple Choice

You deposit $2000 in an account. At the end of 21 years, your balance is $10671.45. The bank tells you that the annual interest rate for the account is 8%. How is the interest compounded?

• A)quarterly
• B)yearly
• C)monthly
• D)daily
• E)continuously

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Definitions:

DDM

The Dividend Discount Model, an investment valuation tool used to estimate the value of a company's stock by considering expected dividends and discounting them back to present value.

Sensitivity Analysis

A technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions.

Model Inputs

The variables and parameters fed into a model to simulate different scenarios and predict outcomes.

Plowback Rate

The percentage of profits a company retains and reinvests in its operations rather than distributing to shareholders as dividends.