rate which is divided by compounding periods to calculate periodic rate must be___________________?
Correct answer: C. Nominal rate
- A. Annuity return
- B. Deferred annuity return
- C. Nominal rate
- D. Semiannual discount rate
Explanation
The nominal rate is the quoted annual interest rate that is divided by the number of compounding periods to obtain the periodic rate. The periodic rate is then used for each compounding interval.
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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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