What Amount of Money,if Saved at an Interest Rate of 5

question 88

Multiple Choice

What amount of money,if saved at an interest rate of 5 percent,would accumulate to $105 one year from now?

• A)$100 today.
• B)$100 next year.
• C)$105 today.
• D)$5 next year.
• E)cannot be determined.

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Definitions:

Market Interest Rates

The prevailing rate of interest available in the marketplace for securities, loans, and deposits, determined by supply and demand dynamics.

Par Value

The face value of a bond or the stock value stated in the corporate charter, which is the nominal value of a security.

Semi-Annual Interest

Interest that is calculated and paid twice a year, commonly found in bonds and certain types of loans.

Coupon Rate

Interest yielded on a bond each year, displayed as a percentage of its face value.