Which of the following statements is false?
A) The present value of a future sum decreases as the discount rate increases.
B) If the present value of a sum is equal to its future value, the interest rate must be zero.
C) If the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the present value of the same series.
D) For a given APR, the present value of a future sum decreases as the number of discounting periods per year decreases.

Question

Quizplus · Accepted Answer

The present value of a future sum actually increases as the number of discounting periods per year decreases, because less frequent compounding (or discounting) means the present value is less reduced over time.

Which of the Following Statements Is False