In time value of money, nominal rate is_______________?
Correct answer: A. Not shown on timeline
- A. Not shown on timeline
- B. Shown on timeline
- C. Multiplied on timeline
- D. Divided on timeline
Explanation
A nominal annual rate must be converted into the periodic rate used for each timeline period, so it is not itself shown as a cash flow on the timeline. The timeline displays payment periods and cash flows, not the nominal rate as a separate event.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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