Types of Interest

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Questions and Answers

What is the prime interest type?

  • A discounted interest rate lower than the lender's standard variable rate
  • A type of interest charged only on the initial amount of money borrowed
  • The interest rate charged on the principal amount and any accumulated interest
  • The rate of interest set by banks for their best customers (correct)

When is simple interest often used?

  • For long-term investments and savings accounts
  • For encouraging customers to borrow money from the bank
  • For a specific period of time as a promotional deal
  • For short-term loans such as personal loans, car loans, and mortgages (correct)

What is compound interest?

  • A type of interest set by banks for their best customers
  • Lower than a lender's standard variable rate
  • Charged on the principal amount and any accumulated interest (correct)
  • A type of interest charged only on the initial amount of money borrowed

How is discounted interest type used as an incentive?

<p>To encourage customers to borrow money or take out a loan with the bank (A)</p> Signup and view all the answers

What does simple interest refer to?

<p>Interest charged only on the principal or initial amount borrowed (B)</p> Signup and view all the answers

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