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Compound Interest Quiz

Authored by Isagani Triste

Mathematics

University

Used 6+ times

Compound Interest Quiz
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10 questions

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1.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Calculate the compound interest on a principal amount of $5000 at an interest rate of 5% per annum for 3 years, compounded annually.

The compound interest is $250.00

The compound interest is $500.00

The compound interest is $795.86

The compound interest is $1000.00

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

If the principal amount is $2000, the interest rate is 8% per annum, and the time period is 2 years, calculate the compound interest compounded semi-annually.

The compound interest compounded semi-annually is $337.69

The compound interest compounded semi-annually is $150.00

The compound interest compounded semi-annually is $500.00

The compound interest compounded semi-annually is $1000.00

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Explain the concept of compounding in the context of compound interest.

Earning interest only on the initial principal

Earning interest on the accumulated interest only

Earning interest on the total amount without compounding

Earning interest on both the initial principal and the accumulated interest from previous periods

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is the difference between simple interest and compound interest? Provide an example to illustrate the difference.

Simple interest and compound interest are the same thing.

Simple interest is calculated daily, while compound interest is calculated annually.

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal amount and the accumulated interest.

Simple interest is calculated on the accumulated interest, while compound interest is calculated only on the principal amount.

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Apply the compound interest formula to find the amount when the principal is $3000, the interest rate is 6% per annum, and the time period is 4 years, compounded annually.

The amount is $3500

The amount is $3200

The amount is $3803.28

The amount is $4000

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Solve the compound interest problem: If the principal amount is $4000, the interest rate is 7% per annum, and the amount after 3 years is $5000, calculate the compounding period.

4

1

6

2

7.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

How does compounding affect the growth of an investment compared to simple interest?

Compounding has no effect on the growth of an investment compared to simple interest.

Compounding leads to slower growth compared to simple interest.

Compounding and simple interest have the same impact on the growth of an investment.

Compounding leads to faster growth compared to simple interest.

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