One Way to Characterize the Difference Between Compounding and Discounting

question 17

Multiple Choice

One way to characterize the difference between compounding and discounting is to say that

• A)compounding involves the assumption that the interest rate is zero,whereas discounting does not involve that assumption.
• B)discounting involves the assumption that the interest rate is zero,whereas compounding does not involve that assumption.
• C)the process of compounding produces a future value,whereas the process of discounting produces a present value.
• D)the process of compounding produces a present value,whereas the process of discounting produces a future value.

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Definitions:

Foramen

A natural opening or passage, especially in a bone, through which blood vessels, nerves, or ligaments may pass.

Fissure

A small tear in the lining of an organ, such as the skin or the lining of the anus.

Sinus

Cavities or air spaces within the bones of the skull and face that are connected to the nasal cavities, playing roles in respiration and the production of mucus.

Tubercle

A small rounded projection or nodule, especially one that is part of the structure of a bone.