Security Prices Are Sometimes Listed in Fractions

question 73

True/False

Security prices are sometimes listed in fractions. For example, a debt security with a price of 22¾ is the same as $22.25.

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Definitions:

Compound Interest

The concept of earning interest on previously earned interest. A sum earning compound interest grows exponentially over time.

Interest

The expense associated with taking out a loan or the earnings from an investment, usually quantified as a percent of the initial amount.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, which represents the actual yearly cost over the term of a loan.

Periodic Compounding

Periodic compounding involves the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a deposit or loan.