--%>
Assignment Help - homework help

Differentiate between compound interest and discounting

Differentiate between compound interest and discounting.

E

Expert

Verified

A) Compound interest comes in the picture when interest is earned on interest as well as on the original principal of an investment whereas Discounting is the opposite of compounding.
B)  Compound interest makes the value of an initial amount to increase at an increasing rate.  Discounting makes the current value of a future amount to reduce at an increasing rate.

   Related Questions in Financial Management

  • Q : Prblem [CAPM Estimate of Cost of Equity

    [CAPM Estimate of Cost of Equity Capital] Voice River, Inc., has successfully moved through its early life cycle stages and now is well into its rapid-growth stage. However, by traditional standards this provider of media-on-demand services is still considered to be a relatively small venture. The i

    		•
  • Q : Managerial |Accounting help Janice

    Janice Colangelo heads the Training Centre of the large HR Consulting firm EMT Consulting. The firm has three major departments: Recruitment, Training and Career Services. The Training Centre provides management training for employees of various businesses. Recruitment provides recruitment service

    		•
  • Q : Describe the concept of the Sharpe

    Describe the concept of the Sharpe performance measure.The Sharpe performance measure (SHP) is a risk-adjusted performance measure. This is describing as the mean excess return to portfolio above the risk-free rate divided by the portfolio's sta

    		•
  • Q : Define pricing of options to simulation

    Who gave the pricing of options to the simulation of random asset paths?

    		•
  • Q : State the term dispersion trading State

    State the term dispersion trading?

    		•
  • Q : Difference between complete market and

    What are the difference between complete market and binomial model?

    		•
  • Q : Forecast the future exchange rates

    Researchers found that this is very hard to forecast the future exchange rates more precisely than the forward exchange rate or the current spot exchange rate. How would you interpret this?This implies that exchange markets are informationally e

    		•
  • Q : Explain Central Limit Theorem with

    Explain Central Limit Theorem with an example of random variables.

    		•
  • Q : Illustrates the Epstein–Wilmott model

    Illustrates the Epstein–Wilmott model?

    		•
  • Q : What is exact way of traders to use the

    What is the exact way of traders to use the gamma to calculate?

    		•