Economics & AnalysisQuestion 13 of 110
Under the time value of money, which factor increases the future value of a single deposit?
a.A shorter investment horizon
b.A higher interest rate compounded over more periods
c.A lower rate of compounding
d.More frequent withdrawals
Explanation
Future value grows with higher interest rates and more compounding periods, because each period's interest earns further interest. Shorter horizons and lower rates reduce future value. Withdrawals reduce the balance that can compound.
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