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One Way to Characterize the Difference Between Compounding and Discounting

Question 17

Multiple Choice

One way to characterize the difference between compounding and discounting is to say that


A) compounding involves the assumption that the interest rate is zero,whereas discounting does not involve that assumption.
B) discounting involves the assumption that the interest rate is zero,whereas compounding does not involve that assumption.
C) the process of compounding produces a future value,whereas the process of discounting produces a present value.
D) the process of compounding produces a present value,whereas the process of discounting produces a future value.

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