Which answer best describes compound interest?
Expert-Verified Answer
Compound interest is when you earn interest on the money you've saved and on the interest you earn along the way. Here's an example to help explain compound interest. Increasing the compounding frequency, finding a higher interest rate, and adding to your principal amount are ways to help your savings grow even faster.
Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from simple interest, where interest is not added to the principal while calculating the interest during the next period.
Interest that grows with a constant rate of change that is calculated both on money you deposit and on money you have earned in interest.
a material that is made up of a combination of atoms bonded together best describes a compound.
Compound interest, also called "compounding interest," is the interest on the initial investment as well as the accrued interest on that investment.
Compound interest is calculated by multiplying the initial loan amount, or principal, by one plus the annual interest rate raised to the number of compound periods minus one. This will leave you with the total sum of the loan, including compound interest.
| Simple Interest | Compound Interest |
|---|---|
| For 4th year: P = 10,000 Time = 1 year Interest = 1000 | For 4th year: P = 12100 + 1210 = 13310 Time = 1 year Interest = 1331 |
| For 5th year: P = 10,000 Time = 1 year Interest = 1000 | For 5th year: P = 13310 + 1331 = 14641 Time = 1 year Interest = 1464.1 |
Simple interest is the interest charge on borrowing that's calculated using an original principal amount only and an interest rate that never changes. It does not involve compounding, where borrowers end up paying interest on principal and interest that grows over multiple payment periods.
Meaning of compound interest in English
interest that is calculated on both the amount of money invested or borrowed and on the interest that has been added to it: Thanks to the power of compound interest, every €1 you invest in your 20s is worth €2 in your 30s and €3 in your 40s.
What statement is true about compound interest?
Expert-Verified Answer
Compound interest is the interest calculated using the principal and the interest over a period of time. The statements that are true about compound interest are: The interest can be compounded over different time intervals. The interest in most banks is not calculated using compound interest.
Compound interest is best defined as: a type of debt that a company issues to investors for a specified period of time. A bond is: A stockholder will always receive a profit when the stock is sold.
Compound interest. The interest which is added on to the initial investment, so that this will itself gain interest in subsequent time periods.
A compound contains two or more different elements in a fixed ratio.
Expert-Verified Answer
The statement that best describes compounds is b. Compounds are made up of atoms of one or more elements bonded together.
Answer and Explanation: Option A is the correct answer as ionic compounds are made of positively-charged cations and negatively-charged anions. The resulting electrostatic attraction between the oppositely charged ions is what creates the ionic bond.
For example, if you invest Rs. 1,00,000 in a fixed deposit with an annual interest rate of 7% for 5 years, the total amount you would receive at maturity would be Rs. 1,40,260. However, if the interest is compounded annually, the total amount you would receive at maturity would be Rs.
Compound interest is interest accumulated from a principal sum and previously accumulated interest. It is the result of reinvesting or retaining interest that would otherwise be paid out, or of the accumulation of debts from a borrower.
Simple Interest: Simple interest can be defined as the principal amount of a loan or deposit a person makes into their bank account. Compound Interest: Compound interest is the interest that accumulates and compounds over the principal amount.
Business risk may be the best known and most feared investment risk. It's the risk that something will happen with the company, causing the investment to lose value.
What number is annually in math?
| Compounding Period | Descriptive Adverb | Fraction of one year |
|---|---|---|
| 1 month | monthly | 1/12 |
| 3 months | quarterly | 1/4 |
| 6 months | semiannually | 1/2 |
| 1 year | annually | 1 |
Compound interest makes your money grow faster because interest is calculated on the accumulated interest over time as well as on your original principal. Compounding can create a snowball effect, as the original investments plus the income earned from those investments grow together.
The power of compounding enables your savings to expand exponentially. Here's how compounding works: You invest Rs 10,000 at an annual return of 8%. In the first year, your investment would grow by Rs 800, reaching Rs 10,800.
Interest is the price you pay to borrow money or the return earned on an investment. For borrowers, interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.
The formula of the amount in mathematics.
The total payback of money at the termination of the time period for which it was borrowed, then it is called the amount. We know that Simple Interest(S.I.) ={Principal(P)×Time period(T)×Rate of Interest(R)}/100.
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