Which of the Following Statements Is Correct

question 122

Multiple Choice

Which of the following statements is correct?

• A) If a bank uses quarterly compounding for saving accounts,the simple rate will be greater than the effective annual rate.
• B) The present value of a future sum increases as the simple interest rate increases or the number of discount periods per year decreases.
• C) The present value of a future sum increases as either the simple interest rate or the number of discount periods per year increases.
• D) The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases.
• E) All of the above statements are false.

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Definitions:

Constant Cost Industry

An industry in which the costs of production do not change as the industry's output changes, maintaining the same unit cost for production regardless of scale.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices over a given period of time.

Supply

The total amount of a product or service available for purchase at any specified price.

Firms

Business organizations engaged in commercial, industrial, or professional activities, aiming to earn a profit.