Multiple Choice
A Canada government bond promises to pay a lump sum of $1,000 exactly 3 years from today.The nominal interest rate is 6%,semiannual compounding.Which of the following statements is correct?
A) The periodic interest rate is greater than 3%.
B) The periodic rate is less than 3%.
C) The present value would be greater if the lump sum were discounted back for more periods.
D) The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.
Correct Answer:
Verified
Correct Answer:
Verified
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