Compound Interest Quiz

What is the formula for compound interest?

• A = P(1 + r/n)^(nt)

• A = P(1 - r/n)^(nt)

• A = P(1 + r)^(nt)

• A = P(1 + r/n)^(nt) + C

What is the formula for continuously compounded interest?

• A = P * (1 + r)^t

• A = P * e^(rt)

• A = P * (1 + rt)

• A = P * (1 - r)^t

What does the principal represent in compound interest calculations?

• interest rate

• initial amount of money or investment

• final amount of money or investment

• time period

What does the interest rate represent in compound interest calculations?

• The total amount of money earned or charged

• The number of compounding periods

• The time period over which interest is calculated

• Percentage of the principal amount charged or earned as interest

What does the time represent in compound interest calculations?

• Number of compounding periods

• Principal amount

• Interest rate

• Duration

What is the difference between compound interest and continuously compounded interest?

• Compound interest is calculated at regular intervals, while continuously compounded interest is calculated and added continuously.

• Compound interest is calculated monthly, while continuously compounded interest is calculated and added continuously.

• Compound interest is calculated annually, while continuously compounded interest is calculated and added continuously.

• Compound interest is calculated daily, while continuously compounded interest is calculated and added continuously.

How does continuous compounding affect the growth of an investment compared to regular compounding?

• Continuous compounding results in faster growth of an investment compared to regular compounding.

• Continuous compounding and regular compounding have the same effect on the growth of an investment.

• Continuous compounding results in slower growth of an investment compared to regular compounding.

• Continuous compounding has no effect on the growth of an investment compared to regular compounding.

Brenda invests $4,848 in a savings account

with a fixed annual interest rate of 5%

compounded 2 times per year. What will

the account balance be after 6 years?

• 4848.00
• 5000.00
• 6000.00
• 6520.02

3) Jasmine invests $2,658 in a retirement

account with a fixed annual interest rate of

9% compounded continuously. What will

the account balance be after 15 years?

• 10,253.04

• 8,932.49
• 8,932.48
• 8,932.46

Ryan invests a sum of money in a savings

account with a fixed annual interest rate of

4.31% compounded 12 times per year.

After 10 years, the balance reaches

$12,855.94. What was the amount of the

initial investment?

• 12000
• 15000
• 8361

• 10000