An Investment Paying 4% Compounded Quarterly Will Have a Value

question 114

Multiple Choice

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:

Addendum

An additional document appended to a contract, agreement, or other document, containing supplementary information or modifications.

Groupthink

A mode of thinking in highly cohesive groups in which the desire to reach unanimous agreement overrides the motivation to adopt proper rational decision-making procedures.

Unanimity

Complete agreement among all members or parties involved on a particular issue or decision.

Rational

Based on or in accordance with reason or logic; capable of making sensible or logical decisions.