(Q. 30 IN B) WHICH OF THE FOLLOWING STATEMENTS IS WRONG ABOUT THE...

25. (Q. 30 in B) Which of the following statements is wrong about the time value

of money (TVM)?

A) Converting an annuity to an annuity due increases the present value.

B) An effective annual rate is always higher than an annual percentage rate,

other things being equal.

C) The more frequent the compounding, the higher the future value, other things

being equal.

D) For a given amount, the higher the discount rate, the lower the present value.

Answer B