TRUE OR FALSE 1. The effective rate of interest is the amount of money that one unit invested at the beginning of a period will earn during the period, with interest being paid at the beginning of the period. 2. The effective rate of discount is increasing for all positive values of t assuming simple discount. 3. Government agencies and private corporations sell bonds to generate funds for their business projects while individuals may buy bonds to invest their money; hence, it is preferable for the individual to buy short-term bonds assuming money accumulates interest given by a linear function. 4. A money invested at 12% annual effective rate of interest will yield the same amount of money if invested at 1% interest per month. 5. Assuming equivalence, a nominal rate convertible monthly is lower than than a nominal rate convertible quarterly.

TRUE OR FALSE 1. The effective rate of interest is the amount of money that one unit invested at the beginning of a period will earn during the period, with interest being paid at the beginning of the period. 2. The effective rate of discount is increasing for all positive values of t assuming simple discount. 3. Government agencies and private corporations sell bonds to generate funds for their business projects while individuals may buy bonds to invest their money; hence, it is preferable for the individual to buy short-term bonds assuming money accumulates interest given by a linear function. 4. A money invested at 12% annual effective rate of interest will yield the same amount of money if invested at 1% interest per month. 5. Assuming equivalence, a nominal rate convertible monthly is lower than than a nominal rate convertible quarterly.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 1bM

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