Question

A bank account earns a fixed rate of interest compounded quarterly (every 3 months).

Determine whether each statement below is true regarding the value of the account. Select True or False for each statement.
True False
The value of the account increases at a constant rate over any unit time interval.
The value of the account increases at a constant percent rate per quarter.
The value of the account increases at a constant percent rate per year.

Answer 1

false

true

false

Explanation:

If an account earns a fixed rate of interest compounded quarterly, the value of the account increases every quarter.

If an account earns an interest that is continuously compounded, the value of the account increases at a constant rate over any unit time interval.

If an account earns an interest that is compounded yearly, the value of the account increases at a constant percent rate per year