Planning for savings account

Assignment Help Financial Management

Reference no: EM132003007

1. You are planning to deposit $1,000 in a savings account. Account A compounds monthly while account B compounds semiannually. If both accounts have the same quoted annual rate of interest, you should choose _______________.

A. account B because it has a higher APR

B. account A because it has a higher EAR

C. account B because it is compounded more often

D. account A because it is compounded at a lower discount rate

2. You are evaluating two annuities. They are identical in every way, except that one is an ordinary annuity and the other is an annuity due. Which of the following is FALSE?

A. The ordinary annuity must have a higher future value than the annuity due.

B. The ordinary annuity must have a lower present value than the annuity due.

C. The two annuities will differ in present value by the factor of (1+r).

D. The annuity due and the ordinary annuity will make the same number of total payments over time.

Reference no: EM132003007

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