If Interest Rates Are 5%,which of the Following Will Produce

question 83

Multiple Choice

If interest rates are 5%,which of the following will produce the largest amount of money in four years?

• A) $500 earning simple interest
• B) $400 with interest compounded annually
• C) $300 with interest compounded semiannually
• D) $100 with interest compounded quarterly
• E) $25 with interest compounded monthly

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Definitions:

Binet

Binet, Alfred (1857-1911), was a French psychologist who, together with Theodore Simon, developed the first practical IQ test, the Binet-Simon scale.

Intelligence Test

A standard assessment tool designed to measure cognitive abilities, such as reasoning, problem-solving, and understanding complex ideas.

Reasoning

The process of figuring out the implications of particular beliefs.

Abstract Thinking

The ability to think about objects, principles, and ideas that are not physically present, a higher-level cognitive skill enabling conceptual understanding.