Question: 1. If you decrease the interest rate for an investment by 10%, will the future value decrease by 10%? 2. If interest is compounded semiannually,

1. If you decrease the interest rate for an investment by 10%, will the decrease by 10%?
2. If interest is compounded semiannually, will the effective rate be higher or lower than the nominal rate?
3. If you increase the number of months in which to pay off a loan, will you increase or decrease the monthly payment? The total amount of interest paid? Give an example to justify your answers.

Step by Step Solution

★★★★★

3.46 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 No not necessarily It depends upon the number of compounding perio... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

1385-M-S-L-P(3053).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

A few years back, Dave and Jana bought a new home. They borrowed $230,415 at a fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their twenty-fifth payment and the...

A friend asks you for a loan of $1,000 and offers to pay you back at the rate of $90 per month for 12 months. a. Using an annual interest rate of 10%, find the net present value (to you) of loaning...

Suppose you make a deposit of $P into a savings account that earns interest at a rate of 100 r% per year. a. Show that if interest is compounded once per year, then the balance after t years is B(t)...

Section one 8 marks Answer by TRUE or False and coxcest the mistakes.if thers ars will decrease ( mark) In a portfolio of stocks, the higher the correlation coefficients the more diversified . If we...

Problem 5-5 Calculating Annuity Cash Flows [LO 1) For each of the following annuities, calculate the annual cash flow. (Do not round intermediate calculations and round your answers to 2 decimal...

I really need some help on my homework assignment please. Please review the attached instructions and all that is highlighted in green is not complete. Thank you very much! IST 204: Excel Essentials...

1. Calculate EOQ if annual sales in are 80,000 units, price per unit is $20, carrying costs are 30%, and fixed costs per order is 100.* A.1,532.99 B.1,732.99 C.1,832.99 D.1,632.99 2. Refer to...

You have been told that the present value of an investment that matures in 6 years is $200,000. Calculate the following: The amount of the interest if the simple interest rate is 10% per annum. (2...

You believe you will need to have saved $500,000 by the time you retire in 40 years in order to live comfortably. You also believe that you will inherit $100,000 in 10 years. Note: Do not round...

can I get help with A1, A2, and A3? Part (a): It is 5 aid that the Indian who sold Manhattan for $44 was a sharp salesman. If he had put his $44 away at 8% compounded semlannually, it would now be...

What is the purpose of having a par value for stock?

Freys, Inc., sells a 12-year franchise to Red Company. The franchise contains many restrictions on how Red may operate its store. For instance, Red cannot use less than Grade 10 Idaho potatoes; must...

What information from your receipt would need to be available to the business functions? Which business function would need the information?

If a price ceiling were imposed in a fish market whose equilibrium price was substantially above the ceiling, what effect would the price ceiling on fish have on the demand for meat and fowl?

Explain, using Theorems 4, 5, 7, and 9, why the function is continuous at every number in its domain. State the domain. 22. G(x) = V(1 + x*) 21. F(x) x2 + 5x + 6 23. R(x) = x + V2x - 1 sin x 24. h(x)...

Locate the discontinuities of the function and illustrate by graphing. 30. y = In(tan?x) 29. y - I+elis

Use continuity to evaluate the limit. 31. lim 4 V5 +x 32. lim sin(x + sin.r) x - 4 3r - 6x 33. lim e- 34. lim arctan

Galaxy United, Inc. 2009 Income Statement ($ in millions) Net sales $8,500 Less: Cost of goods sold 7,140 Less: Depreciation 420 Earnings before interest and taxes 940 Less: Interest paid 74 Taxable...

Maturity Risk Premium The real risk-free rate is 2.25%, and inflation is expected to be 3.75% for the next 2 years. A 2-year Treasury security yields 9.75%. What is the maturity risk premium for the...

The following is the Treasury bond quote as of March 26th, 2021. Assume the face (par) value of the Treasury bond is $100,000 and the bond pays interest semiannually. Answer the following, will...