Technological Uncertainty

question 94

Multiple Choice

Technological uncertainty: 

• A) is a result of uncertainty about customer demand.
• B) occurs because an alternative technology could be introduced by competitors.
• C) only occurs in emerging markets.
• D) can be avoided by early entrants with superior technology.

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Definitions:

Effective Annual Rates

The effective annual rate (EAR) is the actual interest rate that an investment earns due to compounding over a given period, usually one year.

Nominal Rate

The interest rate before adjustments for inflation, representing the face value of financial products.

Compounded Monthly

A method of calculating interest where the accrued interest is added to the principal sum at the end of each month, leading to "interest on interest."

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.