Which of the following statement is FALSE? A. As interest rate increases, presen

Question

Which of the following statement is FALSE?

   A.  
As interest rate increases, present value needed for fixed future investment goal decreases.

   B.  
Interest earned on both the initial principal and the interest reinvested from prior periods is called compound interest.

   C.  
None.

   D.  
As the length of the compounding period increases, small differences in discount rates can lead to large differences in future value.

   E.  
Interest rate and Future value have inverse relationship, when everything else is fixed.

Explanation / Answer

Ans

E.  
Interest rate and Future value have inverse relationship, when everything else is fixed.

Explaination

When Interest Rate increases (Variable) any current deposit /Investment would earn more interest and increase in its Value. Hence interest rate and future value has a direct relationship.

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