Question: (i) Consider the following five patterns: SI, SD, CI, CD, and constant force of interest. Please specify which are equivalent? (ii) Suppose you invest $1
(i) Consider the following five patterns: SI, SD, CI, CD, and constant force of interest. Please specify which are equivalent? (ii) Suppose you invest $1 into the bank with SI pattern a(t) = 1 + it, 0 t n, and you can withdraw and reinvest your money using any frequency but without costs, then what is the upper bound of your future value a(n) in this case? Moreover, you can also invest $1 using CI pattern: a (t) = (1 + i)t and your future value in this case is a (n), then determine which one is bigger between a(n) and a (n). Why?
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