Which of the Following Statements Is True

question 73

Multiple Choice

Which of the following statements is true?

• A) Regardless of the value of the interest rate, increasing the compounding frequency will decrease the future value.
• B) Regardless of the value of the interest rate, increasing the compounding frequency will increase the future value.
• C) There is a relationship between the future value of investment and the effect of compounding frequency. At high interest rates, increases in compounding frequency will decrease the future value.
• D) There is a relationship between the future value of investment and the effect of compounding frequency. At low interest rates, increases in compounding frequency will decrease the future value.

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Definitions:

Indirect Method

A technique used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Property Plant Equipment

Long-term tangible assets held for business use and not expected to be converted into cash in the current or upcoming fiscal year, including land, buildings, machinery, and vehicles.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures needed to maintain or expand the asset base.

Common Stock

A type of security that represents ownership in a corporation, entitling the shareholder to a proportion of the corporation's assets and profits.