Question

Which of the following statements is incorrect regarding the variables that are fundamental to all compound interest problems?

A) The future value is the value at a future date of a given sum or sums invested assuming compound interest.

B) The present value is the value now (present time) for a future sum or sums discounted assuming compound interest.

C) The rate of interest is a semi-annual rate that must be adjusted, if necessary, to the length of the compounding period.

D) A time period may be equal to or less than a year.

Answer 1

The incorrect statement regarding the variables that are fundamental to all compound interest problems is D) A time period may be equal to or less than a year.

Step-by-step explanation:

The incorrect statement regarding the variables that are fundamental to all compound interest problems is D) A time period may be equal to or less than a year.

All the other statements are correct:

• A) The future value is the value at a future date of a given sum or sums invested assuming compound interest.
• B) The present value is the value now (present time) for a future sum or sums discounted assuming compound interest.
• C) The rate of interest is a semi-annual rate that must be adjusted, if necessary, to the length of the compounding period.