Determine Whether the Statement Is True or False

question 155

Multiple Choice

Determine whether the statement is true or false. If it is true, explain why it is true. If it is false, give an example to show why it is false. ​
If compound interest is converted annually, then the accumulated amount after t years is not the same as the accumulated amount under simple interest over t years.

• A) False. Under compound interest , under simple interest. For example, if r=7%, P=$1,000, t=1 yr, so under compound interest A=1,070, and under simple interest A=1,070.
• B) True. This follows from the definitions of the accumulated amount for compound and simple interest.

---

Definitions:

Dividend

A distribution of earnings given by a company to its stockholders, typically from its profits.

Par Value

The face value of a bond or stock as stated by the issuing company, often the minimum amount the security can be sold for.

Stockholders' Equity

The value of a company divided among its shareholders, often represented as the difference between assets and liabilities.

Additional Paid-In Capital

The amount of money investors have paid for shares above the nominal value during stock issuances, reflecting excess capital received by a company.