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Questions and Answers
Which of the following statements accurately describes simple interest?
Which of the following statements accurately describes simple interest?
- Simple interest is calculated based on a fixed rate over time. (correct)
- Simple interest is calculated based on the original investment plus all interest that has been added.
- Simple interest is calculated based on a smaller amount than compound interest.
- Simple interest is calculated based on a larger amount than compound interest.
What is the main difference between simple interest and compound interest?
What is the main difference between simple interest and compound interest?
- Simple interest results in a larger amount of money over time compared to compound interest.
- Simple interest is paid only on the original investment, while compound interest is paid on the original investment plus any interest that has been added.
- Simple interest is paid at a fixed rate, while compound interest fluctuates over time.
- Simple interest is paid only on a portion of the original investment, while compound interest is paid on the full amount. (correct)
Why does compound interest result in a larger amount of money over time compared to simple interest?
Why does compound interest result in a larger amount of money over time compared to simple interest?
- Compound interest is paid only on the original investment, while simple interest is paid on the original investment plus any interest that has been added.
- Compound interest is paid on a smaller amount than simple interest.
- Compound interest is calculated based on a larger amount than simple interest. (correct)
- Compound interest is paid on a fixed rate, while simple interest fluctuates over time.
Which type of interest is more likely to result in a larger amount of money over a long period of time?
Which type of interest is more likely to result in a larger amount of money over a long period of time?
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What happens to the interest earned in compound interest?
What happens to the interest earned in compound interest?
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