The Value of an Investment Paying 4% Compounded Quarterly Will

question 65

Multiple Choice

The value of an investment paying 4% compounded quarterly will have a value at the end of one year equal to

• A) An investment paying 16% compounded annually at the end of 1 year.
• B) An investment paying 2% compounded semi-annually at the end of 1 year.
• C) An investment paying 4% compounded annually at the end of 4 years.
• D) An investment paying 1% compounded annually at the end of 4 years.

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Definitions:

Normal Good

A type of good for which demand increases as the income of individuals rises, holding all other factors constant.

Giffen Good

A product for which demand increases as its price increases, contrary to the standard demand model, due to the interplay of income and substitution effects.

Income Effect

The change in an individual's or economy's income and how that change affects the quantity demanded of a good or service.

Price Decrease

A reduction in the cost of a good or service, which can increase consumer demand but may decrease supplier profits.