
Understanding e and Compound Interest
Interactive Video
•
Mathematics, Business
•
10th Grade - University
•
Practice Problem
•
Hard
Ethan Morris
FREE Resource
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10 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the significance of the number 2.7183 in the context of compound interest?
It is the number of compounding periods in a year.
It is the base of the natural logarithm.
It is the principal amount in the formula.
It is the maximum interest rate possible.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following statements about the number e is true?
e is only used in finance.
e is unrelated to pi.
e is a rational number.
e appears in various mathematical contexts.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How is the interest rate represented in the generalized compound interest formula?
As a percentage directly.
As a whole number.
As a decimal value.
As a fraction of the principal.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If the interest rate is 25%, how would it be represented in the formula?
0.25
25
0.025
2.5
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the example given, what is the compounding frequency if n equals 2?
Semi-annually
Annually
Monthly
Quarterly
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the amount owed as the number of compounding periods increases indefinitely?
It becomes infinite.
It converges to a value involving e.
It remains constant.
It decreases to zero.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What substitution is made to find the limit as n approaches infinity in continuous compounding?
1 over x equals n over r
x equals r over n
x equals n times r
1 over x equals r over n
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